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High data costs challenged; low-income households hit the hardest

2018-03-02 17:42

The high costs of data are seriously stifling the growth of South Africa’s lower-income households, leading to the digital divide leaving many behind in the fast paced world of information access and communication.

This is according to community advocacy organisation Amandla.mobi, who yesterday made submissions at the Independent Communications Authority of South Africa (Icasa) public hearings in Sandton.

An inquiry into high data costs was launched by Icasa last year, with the second draft of public hearings into the “end-user and subscriber service charter amendment regulations 2016” ending on Friday.

Amandla.mobi, who made submissions to Icasa on why data costs should be reduced, say that greater transparency of communication services needs to happen.

“What we are saying is that low income consumers are paying disproportionately higher charges and are in turn not seeing benefits of competition in comparison to high-income consumers who are able to buy larger quantities of data. The low-income consumers actually end up paying more for their data bundles,” Koketso Moeti, executive director of Amandla.mobi told City Press.

Moeti believes that the high cost of out-of-bundle data rates contributes to the general public, particularly those from lower income households, not benefiting from the online space.

“These days, more and more things are happening online. To apply for school, it has to be done online. To register a business, it has to be done online. Even government responsiveness happens more and more in the online space and the inability to access data holds people back from accessing these very basic, but necessary services,” Moeti said.

Moeti explained that two recommendations made in the submission need particular attention: the option of consumers to opt in and out of out-of-data bundle packages and that a restriction on the maximum difference allowed in pricing per megabyte between small and large bundles be implemented.

“Ultimately, those who are only able to afford smaller data bundles pay a higher rate per megabyte, than those users who purchase larger data bundles. A practical example is the Vodacom out-of-data bundle rate from 2017, which basically equates to a user paying R990 per gigabyte of data,” Moeti said.

The out-of-bundle rate, Moeti said, was based on Vodacom’s current 99c per megabyte out-of-bundle rate which came into effect on October 15 last year.


“As table 1 shows, out-of-bundle prices are 10 times higher than prices for 1 gigabyte and this in fact understates the problem. There is significant competition at the top of the market with promotional offers that offer higher-income contract consumers data at 0.03c or less. This means that those consumers who are using small data bundles or using data ‘out of bundle’ may be paying 50 times what richer consumers are paying,” Amandla.mobi said of the table.

Moeti added that some of the mobile providers such as Cell C and Telkom do provide good value packages for smaller data purchases.

Other industry players who also presented submissions included MTN, Vodacom, Cell C, and Telkom.

In 2016, Tariffic, the company that helps companies and individuals determine if they’re spending too much money on their cellphones, conducted research into the data costs within South Africa.

Tariffic found data prices in South Africa to be 134% more expensive compared with other Brics nations.

“Tariffic’s analysis shows that, once prices were converted to rands and re-based for the cost of living, South Africa was consistently the second most expensive for one, two and three gigabyte data contracts, with Brazil being the most expensive in all three cases. Data prices for South Africa were on average 134% more expensive than the cheapest prices in the group,” the report said.

“Data prices are comparably rather expensive in South Africa and there has been no major movement to reduce these prices, specifically for the low-value data bundles, which are in very high demand,” Tariffic chief executive Antony Seeff told City Press.

“Even though there is work to be done across the board with regards to data prices, if people are tired of high data prices, they can move networks to where prices are more affordable,” Seeff said.


Avantika Seeth
Multimedia journalist
City Press
p:+27 11 713 9001
w:www.citypress.co.za  e: avantika.seeth@citypress.co.za
      
 
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July 22 2018