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Our prices will tumble when we get more spectrum: MTN

MTN says its prices will drop and it will be more accessible once Icasa licenses access to new frequencies.
The company will also be able to offer lower prices to 'vulnerable' consumers precisely because of price differentiation. Picture: Siphiwe Sibeko, Reuters

MTN South Africa’s data prices will tumble when it gets access to new radio frequency spectrum, CEO Godfrey Motsa told the Competition Commission in Pretoria on Thursday.

Motsa, who was speaking at the commission’s inquiry into the data services market, said headline data prices will fall when communications regulator Icasa finally licenses access to new frequencies, which is expected to happen in the first quarter of 2019 after years of delay.

“What I cannot tell you is by how much, because I also do not know. But I can guarantee the nation, I can guarantee everyone, that prices will go down when we get spectrum.”

He added that data prices are already falling, but with access to additional spectrum “they will go down faster, and we will be loved again”.

“Not everyone in this country can afford data today. If we get spectrum, we’ll be able to drop prices, so we can increase the pool of people who can afford services,” Motsa said.

The MTN CEO said the company will fight any proposed regulations that seek to “flatten” rates, whereby price differentials will be reduced or eliminated between different types of bundles and data usage plans.

At the same presentation, MTN South Africa chief operations officer Enzo Scarcella said the company is able to offer lower prices to “vulnerable” consumers precisely because of this price differentiation. “On people who are wealthier, you are recovering for areas where you are spending capex that is not fully utilised… If you put a flat rate, you are essentially subsidising the better-off people.”

Flat-rated

Scarcella said if pricing if flat-rated or equalised for everyone, it will achieve the reverse of what regulators hope to do, and prices could rise.

He said on MTN’s network, people in the lowest 80% of spenders get the lowest effective rates based on “private” (non-headline) and dynamic pricing.

“The company prices by site based on usage. The lower the spare capacity, the lower the price,” Scarcella added. This effectively means that people not living in dense urban and wealthier areas pay less for MTN services. MTN is increasingly using machine learning and artificial intelligence to price “for a customer of one”. 

This story was published with the permission of Tech Central. The original publication can be viewed here

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CEO Godfrey Motsa of MTN, should worry more about restoring the share value for shareholders (owners) of MTN by sorting out their externalization messes in Nigeria and Iran before worrying too much about data cross subsidization and right pricing for singular customers.

We all pay the same price for bread. So why differential for data?. You don’t need artificial intelligence if you are intelligent. Just drop the price. What’s difficult to understand?

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