OPINION | More and more businesses are going digital - but data costs could stand in their way

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On average, South Africans pay six times more for data than users in other emerging economies. This has implications for businesses wanting to reach consumers on the fringes of the digital economy, says Jikku Joseph.

If you’re reading this article on your phone, you’re one of an estimated 22 million South Africans using a smartphone – about one third of the population. This number is forecast to grow by more than 5 million in the next two years, as feature phones gradually lose market share.

A smartphone is a miraculous device. You can use it to send messages and e-mails, watch TV, make payments, take photos, interact on social media, check the weather, do your accounting and read a book. But only if you’re connected to the Internet. Disconnect your phone from Wi-Fi or mobile data and you’ll soon realise that it’s nothing more than an expensive paperweight. 

Sadly, that’s the reality for millions of South Africans. They might have access to a smartphone (either their own or one in the family) but the cost of data is so high that they are essentially excluded from the mobile economy, barred from accessing all the wonderful tools available to those with reliable Internet access.

Arthur Goldstuck from World Wide Worx, an independent technology research and strategy organisation, was quoted in the Mail & Guardian:  "Simply maintaining the Play Store app on Android phones, and keeping basic apps updated, uses a level of data that is not affordable for up to a third of smartphone users," he said.

The debate about data costs is nothing new. On average, South Africans pay six times more for data than users in other emerging economies. This discrepancy ignited the #DataMustFall movement in 2016, and four years later the Competition Commission published a report stating that dominant players like Vodacom and MTN must cut their data prices by 30-50%. The telco giants fought back, claiming that they are hamstrung by high infrastructure costs and a lack of new spectrum – the radio frequencies allocated to the cellular-services industry for communication over the airwaves.

Eventually, in March 2020, after much back-and-forth, a compromise was reached and Vodacom and MTN reduced the prices of their data bundles. But it was a lukewarm win: On both networks, 1GB of data still costs about R100, and for some unfathomable reason, that data is still only valid for 30 days.

Digital businesses are starting to realise that the telco giants are unlikely to level the mobile data playing fields anytime soon, so they’ve started looking at other solutions. One such business is Moya, which was launched in 2018 and allows users to send unlimited text messages and voice notes with no data taken from their airtime or data bundle balance.

Moya’s business model is to create a data-free platform that obviously benefits its users, but as CEO Gour Lentell explained to TechCentral, it also allows other organisations to leverage the platform: financial institutions delivering customer support, for example, or trade unions wanting to communicate with their members, government agencies disseminating information, NGOs looking to reach communities, the fast-moving consumer goods (FMCG) sector targeting its audience… The list goes on.

As competitor apps like WhatsApp and Messenger become increasingly data-hungry, what sets Moya apart is that sending and receiving messages from businesses or other enterprises remains data-free for the end user. Business communication might be on a consumer opt-in basis only, but the potential is obvious: data-free interaction is a very exciting prospect for a whole range of industries.

Moya has managed to capture a monthly active user base in South Africa of nearly 5 million, compared to WhatsApp’s monthly active user base of about 9 million. Both will continue to trend upwards - the question is which curve will be steeper. 

Realistically, in the next decade at least, data prices are unlikely to fall to levels that will catalyse social change. Businesses and product developers will need to consider how they want to reach the huge number of South Africans on the fringe of the digital economy.

Joseph is CEO of budgeting app 22seven. Views are his own. 
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