Data must fall but spectrum won’t solve the problem

SA’s data costs are incredibly high, according to a report submitted to Parliament.
SA’s data costs are incredibly high, according to a report submitted to Parliament.

Every month on the 25th, without fail, my day starts with a text message from my brother saying “ke kopa data (may I please have data)”.

Like many other South Africans, having a mobile device means the internet is a touch of a button away for him.

But because he is dependent on mobile network operators for access he remains “mostly off”, and even when he is on he is unable to enjoy the full range of what the internet has to offer because it is not affordable.

He is far from being alone.

Those who can afford contracts and large data bundles get the best value for their money.

They are able to access alternatives to mobile data, both at home and at work.

But low-income users are in a different position.

They have almost no option but to use prepaid mobile data and buy small data packages, which are exponentially more expensive.

A research report titled Izolo: Mobile Diaries of The Less Connected shows how this forces low-income consumers to limit their use of the internet to social media networks and instant messaging applications.

This is affirmed by Research ICT Africa’s 2017 Access Survey, which found that “the affordability divide between the low- and high-income South Africans is creating barriers to connecting low-income earners”.

An assessment done by the Competition Commission as part of the Data Market Inquiry found that “headline retail prices of all mobile operators demonstrates that consumers of small data bundles, generally being poorer consumers, pay inexplicably more on a per MB/GB basis”.

Simply put, the provisional report of the inquiry found the networks to be “anti-poor”.

It goes on to state that, “the inquiry team suspects that lower income consumers are being exploited with price differences that lack any objective rationale simply because they are poor, lacking in both income and alternative data service options”.

Read: High data costs challenged; low- income households hit the most

The preliminary findings and the recommendations of the report around mobile data costs and transparency are consistent with the submission made to the inquiry by, a community advocacy organisation.

The recommendations include regulating to limit the spread of pricing between large and small data bundles, as well as prepaid and post-paid customers.

Alongside this, we recommended piercing the veil of secrecy that enables the exploitation of low-income consumers by requiring operators to provide and publish data on volumes of purchases of data for their different bundle sizes and price points, as well as develop new price and affordability indices that take account of “sachet pricing”, a marketing strategy and the sale of items in smaller sizes.

During his state of the nation address last month, President Cyril Ramaphosa mentioned that policy direction would be given to the Independent Communications Authority of SA (Icasa) to begin a licensing spectrum “that will significantly reduce data costs”.

For some years, mobile operators have argued that high data costs are the result of delays by Icasa in licensing additional spectrum.

Without a doubt, spectrum constraint has been a barrier to coverage expansion and allowing for more effective competition.

But it cannot be assumed that the licensing of spectrum will lead to lower data costs for consumers living on average or below average incomes, like my brother.

In fact, given the industry’s inability to justify the existing price gap between large and small bundles it is likely that this will continue unless spectrum assignment is explicitly tied to the lowering of data costs for low-income consumers, which a cap on price differentials enables.

Given how operators have failed to provide sound justification for the existing price differentials, one can assume that this is the result of market failure – a lack of competition between providers for low-income customers.

There’s little reason to believe this situation will be resolved if spectrum is released.

It is for this reason that endorses the recommendations of the inquiry to limit price discrimination, increase transparency of effective prices, reduce the gap between headline and effective prices, and only on the basis of such commitments to release additional spectrum.

Those involved in the licensing of spectrum would do well to heed this concern.

We cannot continue to allow the poorest to be subjected to a highly restricted “internet of the poor”, while connectivity improves for the wealthier.

This discrimination further entrenches inequality in a country that is already home to one of the world’s most unequal societies.

Moeti has a background in civic activism and has worked at the intersection of governance, communication and citizen action. She is this year’s Atlantic Fellow for Racial Equity, an inaugural Obama Foundation Fellow and a 2017 Aspen New Voices Fellow. Follow her on Twitter at @Kmoeti

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