Lowest earners spend up to 20% on airtime, while SA data is 16th out of 47 African countries


If you want to get anyone’s attention in South Africa these days, start a movement with a hashtag ending in “must fall”. That’s what has seemingly happened after years of protest about overly expensive cellular data have culminated with the #DataMustFall campaign

Following innumerable complaints and public outcries, the tipping point appears to have been an impromptu tweet by radio DJ Thabo Molefe, whose rants on Twitter seem to have spurred the lethargic process into something that might, just, almost, perhaps, look like progress.

Tbo Touch, as he’s known, was due to address the parliamentary Portfolio Committee on Telecommunications and Postal Services yesterday (Thursday) about why data remains so high.

Clean Development Mechanism project in Cape Town, South AfricaSouth Africa has a deeply iniquitous cost structure when it comes to data use. After a consumer finishes their data bundle, each megabyte is charged at R2. Add that up and it’s dangerously expensive. Many unwitting people have ended up with thousands of Rands on their bill because of this. Meanwhile the networks blithely profiteer from this inevitable overrun in a digital, mobile world.

“South Africa’s cheapest 1GB data places it at 16th of out 47 African countries assessed by Research ICT Africa,” the research think tank executive director Dr Alison Gillwald said this week. “All operators, except for Telkom Mobile and MTN, advertise 1GB of mobile data for prices around the R150 mark. In comparison to other large markets, Egypt, Kenya and Nigeria have better data prices compared to South Africa,” Gillwald said in her written submission to parliament.

Tanzania, meanwhile, offers the 1 gigabyte cheapest in our region at USD0.89 (R12.50)

Research ICT Africa estimates that users in the “lower income category, are spending significant portions of their income, around 20%, on relatively small amounts of data (1GB)”.

As industry veteran and now commentator Andrew Fraser tweeted at Vodacom and MTN: “Can you explain why [out of bundle]data costs R2,000 per GB? #datamustfall”.

Every time I have asked senior network executives why they penalise their customers with such onerous out-of-bundle rates, they have offered up meaningless and invalid arguments. They one I’ve heard most often – told with a straight face usually – is that they are trying to prompt their customers to purchase data bundles.

But why penalise your customers if they don’t, I’ve asked. Why do networks hate their customers so much that they punish them for actually using data on their network when their bundle runs out? Surely that’s what you’d like from a customer, for them to use more of the product you’re selling?

It’s like talking to an airline about customer service.

Another key complaint from consumers is that networks have expiry dates on the monthly data people buy, usually within 30 days of month end. This has prompted quite legitimate concerns that this practise might contravene the Consumer Protection Act: if you’re buying something virtual and intangible, why must it have an (arbitrary) expiry date?

The obvious answer is that networks are hanging onto outdated business models when this R2/MB was established. Until forced to reduce it by the Independent Communications Authority of SA, it’s unlikely operators will willingly reduce another iniquitous cash cow.

It was only strict rulings from Icasa that saw voice calls drop significantly over the last few years, as the profitable interconnect fee between operators has been brought down by rulings from the regulator.

The interconnect fee is what operators charge each other to complete a phone call from another network, a hangover from the vastly profitable early years of the cellular business. But voice is rapidly declining as a revenue stream, as data-centric mobile users spend more time on social media, watching videos and text chatting than calling.

It’s a new data world. It’s time the networks stopped profiting from the past.

This column first appeared in Financial Mail


About Author

Toby Shapshak is editor-in-chief and publisher of Stuff, a Forbes contributor and a Financial Mail columnist. He has been writing about technology and the internet for 20 years and his TED Global talk on innovation in Africa has over 1,5-million views. He has written about Africa's tech and start-up ecosystem for Forbes, CNN and The Guardian in London. He was named in GQ's top 30 men in media and the Mail & Guardian newspaper's influential young South Africans. He has been featured in the New York Times. GQ said he "has become the most high-profile technology journalist in the country" while the M&G wrote: "Toby Shapshak is all things tech... he reigns supreme as the major talking head for everything and anything tech."

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