Smartphones proliferating - but data access creates a divide

Smartphones may be invading the mass market - but high data costs create a divide. (Reuters)

Smartphones may be invading the mass market - but high data costs create a divide. (Reuters)

The digital divide is vanishing as the masses embrace smartphones. In its place, we have the data divide.

It should be obvious by now that the days of the basic cellphone are waning as smartphones begin to invade the mass market. By the end of 2015, it is likely that half of all South African adults will be using a smartphone.
By 2020, all phones will probably be smartphones.

This means that the digital divide, in terms of having the physical means of access to the internet, will have all but vanished.

What remains in its place however, is an equally big divide. This time, it’s the data divide. Because you may put the means of access in the hands of everyone, but if you keep the cost of access too high the divide remains.

The data divide can be defined by simple arithmetic. The average revenue per user (ARPU) on the MTN network is R100 per month. The average user typically cannot afford to buy a large data bundle or is not accustomed to the idea of buying data by the bundle at all. As a result, any data use comes off airtime, based on the ad hoc cost of data. In other words, R1 per megabyte on the MTN network. 

According to – which “tracks how the web is built” – the average webpage of the world’s 1 000 most visited sites was 1.85 megabytes last month, and growing fast every few months.

This means that reading just three of the main news items from two online newspapers will use up a tenth of the average MTN user’s budget if no bundle is being used. 

Applying this arithmetic to pre-paid customers only is even more eye-opening. On Vodacom, pre-paid ARPU is a mere R67. Its ad hoc data rate, on the other hand, is a jaw-dropping R2 per megabyte. The same reader will use up a third of an average month’s spend on a single morning’s quick flick through the main news stories.

Now add all of that together, and what does the arithmetic tell you? Simply that the mass market that is embracing smartphones is not ready to embrace the internet wholeheartedly. What should it tell the operators? There is no justification in this country to charge R1 or R2 per megabyte when the operators are talking the language of digital inclusion.

Bridging the divide
Vodacom in fact has a great offering for bridging the divide, called a Power Bundle, which allows users to buy 50MB of data for R3 – effectively 6c per megabyte. That’s on par with the per-megabyte cost of Vodacom’s most expensive bundles – but it has to be used within 60 minutes of activation.

On the one hand, that’s the equivalent of consuming all the latest news on several newspapers, watching a few YouTube videos and downloading a few music tracks. On the other hand, the user has to know about it to take advantage of it, and can’t use it as needed. It’s still a significantly better option than MTN’s cheapest bundle, 30MB for R10, or 33c per megabyte.

The puzzling aspect of these prices is that if data can be sold to low-end users at anywhere from 6c to 33c per megabyte, why retain the R1 and R2 ceiling prices when it merely creates bad public relations for the networks?

Cell C rubs salt into the wound by claiming that 99c per megabyte is “a good rate”. It then contradicts itself with an argument that the high out-of-bundle rate is designed to push consumers to buy bundles, which helps the networks better plan capacity and load “dimensions”. But it is hard to see how this can be the case when there is no specific timeframe on when data bundles will be activated or used.

The shape of the digital divide
The more well-off data users among us regularly buy by the gigabyte. If we can afford it, from R399 to R699 a month, we can buy one of the following 10GB bundles – MTN: R399 (4c/MB), Vodacom: R599 (6c/MB), Cell C: R699 (7c/MB), and Telkom Mobile: R698 (7c/MB)

The least well-off among us, who believe they cannot afford to buy any bundle upfront, will pay 99c per megabyte on Cell C, R1 on MTN and Telkom Mobile and R2 on Vodacom. Given the current cost of the smallest bundles, why not bring this ceiling down to 33c? In effect, that is what it would take just to begin crossing the data divide. It would also pull the teeth from the most severe criticism the operators are facing in the second half of 2014.

Free Wi-Fi hotspots, such as those being rolled out by Project Isizwe, help to minimise the impact of the data divide – but their reach is limited.

While the networks grapple with the arithmetic though, there is something they can do to ease the burden: they can zero rate key educational sites like the global Wikipedia encyclopaedia, and the local open source maths and science syllabus site Siyavula, allowing free access to these – and other – revolutionary tools of learning. 

They could also add government sites, online and mobile health advice and counselling services, and directories of public service entities like clinics and police stations. The impact on their networks would be negligible, yet the impact on those stuck on the wrong side of the data divide could be immense. And it would go some way towards burnishing the image of the operators. –

Arthur Goldstuck is the founder of World Wide Worx and editor-in-chief of Follow him on Twitter @art2gee.

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