Abstract
Mobile telecommunications, and in particular the growth in mobile data consumption, has transformed the way in which consumers and businesses operate and communicate, and has significantly contributed to the growth of the economy through increased productivity effects. Competition in mobile telecommunications markets has become an increasingly important theme as economies strive for more competitive outcomes to maximise the potential for expanded services, lower prices, and increased innovation. Over the past 19 years, the effective duopoly in the South African mobile telecommunications market, which had long been protected by a strong network effect, was interrupted by the entry of Cell C in 2001, Telkom in 2010, and Rain Mobile in 2017. This research study assessed the impact of entry on the nature of competition in the South African mobile telecommunications market, using Rain Mobile as a case study. Using bi-annual data on mobile data headline prices and promotional offerings from 2016 to 2019, the study analysed price-based competition by (i) employing a simple price comparison methodology of the 1GB and 5GB data-bundle plans offered by each of Vodacom, MTN, Cell C, Telkom, and Rain Mobile and (ii) calculating effective prices using data on promotional offerings and discounts offered by mobile operators on their 1GB and 5GB data-bundle plans in the same period. The research study went further to analyse the nature of competition on non-price factors such as coverage, quality, reputation, and brand awareness between the mobile operators. While the study found no obvious response from competitors to the entry of Rain Mobile on headline prices, the assessment on promotional offerings demonstrated much more vigorous competition among the operators through lower prices and product variety. The study also found evidence of competition on non-price factors among operators. The study found that, although the impact of the entry of Rain Mobile had been effective in inducing ability and willingness among customers to switch and inciting a response from competitors in the form of new product offerings and reduced prices to the benefit of consumers, such impact was limited to only a segment of customers and did not reduce overall prices of mobile data.
M.Com. (Competition and Economic Regulation)