High price of data crippling progress
How the poor get to pay much more
The cost of communication is stifling the nation’s growth. John Harvey reports
High mobile data costs are severely hampering economic development in the Eastern Cape’s informal sector.
That is the tragic reality facing the province’s budding entrepreneurs as a new global survey of data prices has found that South Africa ranks 143rd out of 230 countries studied.
For a country constantly flirting with junk status, the average price of R101.91 for 1GB of data has serious implications for how people are able to grow their businesses in a world increasingly dependant on internet connectivity.
In the Eastern Cape, South Africa’s poorest province where unemployment continues to surge, the high price tag of data is felt even more.
UK company Cable.co.uk analysed data from 6,313 mobile data plans in 230 countries between October 23 and November 28 2018.
The average cost of one gigabyte (1GB) was then calculated and compared to form a worldwide mobile data pricing league table.
India is home to the cheapest data in the world, where 1GB costs the paltry sum of R3.60. The most expensive place in the world to buy data is Zimbabwe, where the average cost per 1GB is R1,047.
While this country is not quite Zimbabwe, the survey shows that citizens pay 28 times more for data than India, categorised as a developing nation like South Africa and also a Brics member state.
This week, the Dispatch investigated how high data costs are affecting informal traders in the province, including those in the taxi industry.While the Cable.co.uk report reflects an average 1GB cost of just more than R100, the truth is that this cost is much higher when purchased at brand retail outlets or through a banking app.At Pick n Pay, 1GB of data from MTN, Vodacom and Cell C sells for R149. The same amount of data from Telkom Mobile comes in at R100.Through the FNB banking app, the same costs apply.What is significant is that 1GB of data sells for far less in Eastern Cape spaza shops. One spaza shop owner told the Dispatch that he sold 1GB of data for R70 from the “big three” networks.But paying for it is still a major struggle for informal traders - so much so that any ambitions they may have of expanding their businesses are being squashed, they said.Together with her father Nicholas, Khaya Sitshikiza, 28, runs Spares Centre, a small parts store in East London’s Nompumelelo township.The pair have to order supplies from a wholesaler in Durban, and are heavily reliant on data to fill in online order forms.“We use about 60MB (roughly R10 on the MTN daily bundle ) of data a day, and then spend about R55 a day on airtime. That’s every day, six days a week,” Sitshikiza said.This amounts to about R400 a week on data and airtime. “We have to buy those parts, so any bit of money we can save is important. Our plan is to expand to West Bank and Wilsonia, but the high data costs are not helping us to save money. My dad always complains about the high costs. Data must fall,” she said.Nompumelelo’s sedan taxi industry, which involves drivers transporting passengers not only within the Buffalo City metro but also to other parts of the province like Butterworth, is particularly hard hit by high data costs.Luthando Sopheku, a spokesperson for sedan taxi drivers at the Nompumelelo rank, said drivers used between 500MB (R55) and 700MB (roughly R60) a week on data.“We connect with our passengers through WhatsApp groups, but the data costs are very high,” he said.“The only thing we can say is that data costs are less than airtime. But if data is cheaper we will be going home with a lot more money.”He said taxi bosses were feeling it “the worst”, because they had several vehicles on the road and had to liaise with the drivers who worked for them constantly.The personal impact on drivers could also not be underestimated. “We drive to many parts of the Eastern Cape, but we have to stay in touch with our families because it is not safe to drive at night. They need to know where we are. So we have to stay in touch with them, and that costs data.”
Fruit and vegetable vendor Khanyile Pupu uses about 30MB of data a day, ranging in price from R10 to R20 depending on the network. To a full-time employee, that may not seem like much but when traders are dependent on passersby for their custom, R100 a week can be a lot of money.
“I would love to employ another person, but that means I would have to be in contact with them more, which will cost me more for data,” he said.
Andile Nontso, of the Eastern Cape Chamber of Business, said high data costs were “killing” small businesses in the province.
“As a chamber, we have certainly discussed high data costs. It is not only the informal sector, but SMMEs as well,” Nontso said.
“If you look at BnBs, they can’t compete with hotels because they can’t afford Wi-Fi for their guests. And when people do make bookings, the BnBs have to process these online. They have to pay high costs for data to do this. It is not allowing small businesses to grow.”
Amandla.mobi is at the forefront of the #DataMustFall campaign.
The community advocacy organisation has made submissions to the Independent Communications Authority of South Africa (Icasa), highlighting the plight of the poor in how they access and consume data.
The Dispatch informed amandla.mobi’s Paul Mason that Eastern Cape informal traders were struggling with high data costs, and asked why this might be the case.
Mason sketched a scenario in which poorer people were actually paying more for data at the end of the day.
“Thando’s granny has been sick and Thando wants to check on her because she is at home alone, but she only has R30,” he said.
“She could use her old phone, which has no internet and charges quickly to buy a R30 SMS bundle and get 100 SMSes, or she could charge her smartphone, which uses more electricity but allows her to use her R30 to buy a 1GB data bundle. This bundle will only last an hour, but she could send 3 million WhatsApp messages compared to 100 SMSs for the same amount of money. So data is cheaper than SMSs. Sounds like a good deal.
“Eric, on the other hand, is also buying a data bundle to check on his granny – a 100GB bundle for R3,499. He pays R34 per GB, meaning he is actually paying more per GB, but his data will last 730 hours longer than Thando’s because his bundle lasts for one month. Eric and his granny can communicate with each other anytime, but Thando’s choices are limited.”
Mason said even if Thando had R60 to buy a 300MB data bundle which lasted a month like Eric’s, Thando would receive 5MB per R1, while Eric was getting 28MB for every R1, which is 5.6 times more than Thando receives.
“No matter how you look at it, the poor pay more. Whether it's the huge cost per SMS if your phone can't access the internet, compared to WhatsApp, or the cost per MB and how long a bundle lasts, it’s expensive to be poor.”
Mason based his calculations on MTN’s rates of April 11 - R30 for 100 SMSs valid for 1 month; R30 for 1GB valid for an hour; R60 for 300MB valid for 1 month; and R3,499 for 100GB valid for 1 month.
There have been suggestions to make certain websites, such as job portals, free, so job-hunters can access them easily. However, Mason said this still might not be the answer.
“Lets say mobile networks are forced to make it free to access certain websites, to apply for jobs. That’s fine, but when Thando goes onto those sites, they are all in English, which according to research by Wits is a major barrier for many people. If Thando wants to look up a certain word, so she can answer a job application question properly, her network may not have made that search engine free to use.
“The truth is, people like Thando should not be paying a poverty premium on data in the first place. While charity from networks making certain websites free may be a step in the right direction, it doesn’t change the fact that it’s an injustice that the poor who struggle to afford basic necessities, contribute more to networks’ super profits compared to the rich who can afford to pay more. We need both, free websites for the public good, and fair prices.”
He said amandla.mobi would continue its #DataMustFall campaign to slash the poverty premium networks forced on the poor majority.“Tens of thousands of our members will continue to make their voices heard by institutions such as Icasa and the Competition Commission. Networks must realise their days of pick-pocketing the poor are numbered because of our people-powered campaign.”The Dispatch asked Vodacom why township spaza shops were able to charge less than half the price for 1GB of data than a major retailer or bank. During the Dispatch investigation, it was found that spaza shops were charging R70 for 1GB, whereas Pick n Pay charged R149.“Apart from the actual size of a data bundle, one of the most important elements that determines its price is the validity period,” Vodacom said in a statement.“What this means is that the examples you provided are not quite the same: the 1GB bundle for R149 will have a 30-day expiry period, while the 1GB for R70 bundle will, in all likelihood, have a seven-day expiry period. So to answer your question, there is no differentiation of data pricing between retailers and banks and spaza shops.”..