/ 16 March 2018

Critical Thinking Forum: Why are we paying so much for data?

Danish photographer Mads Nissen shot his evocative winning picture of 'Jon and Alex' in a bare room in Saint Petersburg
Danish photographer Mads Nissen shot his evocative winning picture of 'Jon and Alex' in a bare room in Saint Petersburg

In February 2018, Minister of Economic Development Ebrahim Patel made promises that government would prioritise bringing down data costs as part of developing an economy in line with the Fourth Industrial Revolution. This acknowledgement — that access to information and communication technology (ICT) today determines the lifestyle and general well-being of citizens — is a critical observation, and requires the intervention of regulators to ensure that universal access to broadband services, as prescribed by the United Nations Human Rights, is achieved.

The Mail & Guardian and the Independent Communications Authority of South Africa (Icasa) hosted a debate at the Maslow Hotel in Sandton on Wednesday, March 14, 2018. The debate, moderated by award-winning journalist Iman Rappetti, was meant to address core issues and come up with possible answers to the question, “Why are we paying so much for data?”

A panel of five individuals who have an interest in the #DataMustFall debate was gathered to answer the question. Professor Babu Sena Paul from the University of Johannesburg included in his opening remarks the example of Jio, a mobile operator in India with a market proposition of free data. “Data can be free,” said Paul. His sentiments were supported by Indra de Lanerolle, a media and communication researcher and consultant from the University of Witswatersrand’s Journalism Department. He said: “We pay so much because mobile network operators are choosing to charge these prices.”

Koketso Moeti is the Executive Director of Amandla.mobi, a movement of 203 786 people taking action to build a more just and people-powered South Africa. Her anecdotes brought to light the plight of the poor regarding access to data. Her movement is working to turn every cellphone into a tool that entrenches democratic principles, so that those most affected by injustice, especially black women and low-income communities, can mobilise in large numbers to challenge those in power.

South Africa’s cellphone penetration is the highest in Africa. Mobile research group GSMA Intelligence released a 2016 report claiming that South Africa then had 37.5 million unique mobile subscribers, a 68% penetration rate, compared to Nigeria’s 86 million mobile subscribers, representing 45% of the population. Yet, regulatory bodies such as Icasa and mobile operators are bound by a legislative and regulatory framework that doesn’t offer incentives for mobile operators to drop prices, Icasa chief executive Willington Ngwepe noted.

Loren Michelle Braithwaite-Kabosha is the Chairperson of the South African Communications Forum, a representative body of the ICT industry encompassing the telecommunications, electronics, IT and broadcasting sector. As a former Chief Executive of a company that rolled out telecommunications infrastructure throughout the African continent, she is well aware of the input costs involved in the setup of a telecommunications network.

She believes data costs should fall, but a detailed analysis of costs along the value chain should be considered when determining pricing of product offerings from mobile operators. There have been downward trends in the price of data, dropping as much as 45% according to research, but the mumbled expressions of discontent from the audience in the room indicated that this was not enough.

The big industry players claim that access to high demand spectrum will allow more mobile operators to enter the market and create competition. A member of the audience commented that competition doesn’t always translate into benefits for the consumer.

Icasa as the communications regulator of South Africa also has the duty to issue licences to compliant persons and companies looking to access spectrum for mobile and broadcasting. Ngwepe noted that in excess of 300 licensees have been granted licenses to operate in the mobile market, but issues relating to the release of state-owned spectrum have prevented the release of additional spectrum since 2003.

Other issues relate to the availability of infrastructure for the new licensees to utilise. One proposition from the audience was for policy and regulation to compel mobile operators who already own infrastructure to share that infrastructure with burgeoning mobile operators. In order for this possibility to occur, technical and economic feasibility assessments will need to be undertaken by the communications regulator, but this costs time and money.

Punishing the poor

South Africa is plagued by huge economic disparity: the Gini coefficient rates South Africa as one of the most unequal societies. The poorest of the poor, who urgently need access to data to change their circumstances, are the ones most affected by high data costs. Basically, the more data one can afford to buy lessens the “per megabyte” rate which the service costs. This is a model designed to increase profits by increasing the volume of cheaper packages at a higher per megabyte rate.

Representatives from Vodacom spoke of how in the past a large number of their subscribers had moved from monthly data packages to the daily packages, which according to economies of scale is more expensive than buying a 5kg sack of maize meal per day. But there are packaging costs involved in the fast-moving consumer goods market that do not necessarily exist in the “packaging” of data bundles, said Iman, while questioning the moral indifference of the mobile operators.

Public participation

Public participation and pressure seem to be the only way that consumers will obtain justice. South Africa has regulatory institutions such as the Competition Commission and industry specific regulators such as Icasa. Every so often, public participation is sought to bring amendments to existing regulatory frameworks, but of all the stakeholders, the ITC industry is the most active and it submits proposals that benefit consumers only slightly, without compromising their profits.

Amandla.mobi encourages public participation through engagement and the use of petitions to educate the public about their rights. Mobile operators built their business models based upon profit before people and they need to be taught how to adjust to our changing world, where access to data is a basic human right, stressed De Lanerolle. Data has become a utility much like water and electricity, which are subsidised by government; the question becomes, is a similar model necessary to address the issue of access to data? And the answer is yes, but consumers need to participate, and mobile networks need to report to parent companies that invested in the current infrastructure in search of profits.

Amended End-user and Subscriber Service Charter

Icasa’s soon-to-be-concluded End-user and Subscriber Service Charter seeks to address the major issues related to transparency, expiration of data and the high price of out-of-bundle rates. The draft regulations, if adopted by the end of March, will translate into new rules of engagement governing telecommunications and changes relating to the expiration of data bundles.

Panellists, having contributed to the charter, still see loopholes in it that do not address the issue of data pricing punishing the poor. The charter was premised on the identification of primary markets, that Icasa identified as requiring intervention with regards to transparency and pricing. The transparency will aid in empowering the consumer to make informed decisions, such as being notified at regular intervals of the amount of data bundles available and the option to opt for out-of-bundle pricing. The expiration of data is proposed to be extended to a period of three years, but the poor, at least for now, remain with the desire to have enough data to last them just for today. And this is the nub of the matter: that policy sometimes disregards the needs of the poor.