Why zero-rated mobile phone content is a nation-builder

Cellphones have possibly been the most powerful societal bridge-builder of the post-Mandela era. Their introduction to South Africa coincided with the advent of democracy in 1994 and now, almost every household has at least one. However, their potential contribution to socioeconomic development has never been fully exploited, and in an increasingly digital world, they now risk driving an even bigger wedge between the rich, who can afford smartphones and data, and the poor, who can’t. 

This is why just twenty words in the new conditions of licences for telecommunications companies bidding for more broadband represent a major breakthrough for nation-building.

The conditions, gazetted on 2 October 2020, state that a “licensee assigned spectrum through this process shall zero-rate all the mobile content provided by public benefit organisations including .gov.za websites”. 

In essence, this will enable all cellphone users to access digital content for early learning, education, health and work preparation, among other services, in their own homes. Arguably, it is the most significant move towards bridging South Africa’s digital divide since the introduction of mobile technology.

Equitable access to broadband spectrum is at the heart of Telkom and MTN’s latest gripe with the Independent Communications Authority of South Africa (Icasa). Icasa is set to auction off more bandwidth next month and MTN fears that all of the 3.5GHz spectrum needed for 5G operations will be assigned to newer entrants into the market, who have preference in the first round of bids. 

Telkom worries that it will have to stump up the costs for sub-1GHz bands, which won’t be immediately available for use by mobile operators. 

Icasa is trying to balance the objectives of fairness and efficiency, which tend to pull in opposite directions in oligopolies such as the mobile industry in South Africa. Hopefully, these matters will be resolved soon, as it is in everybody’s best interests to ensure that additional spectrum is allocated urgently. 

Zero-rated content

While the telcos jostle for a slice of the pie (and its satisfying stream of profits), the ultimate role of Icasa is to regulate the communications sector in the public interest. Lest we forget, fair and equitable access for consumers is its main goal. This can be achieved by combining the data distribution capacity of commercial providers with the digital content of non-profit organisations committed to social and economic inclusion. In addition to e-services provided by the government, there are already at least 100 public benefit organisations (PBOs) whose life’s work is to provide the poorest communities with learning resources, books, stories, language and maths. Digital content — customised for both feature phones and smartphones — has been pioneered by initiatives such as SmartStart early learning franchise, the Nal’ibali reading campaign,  FunDza e-books for teenagers and others. However, their reach has been seriously constrained by high data costs.

When that constraint was lifted during lockdown, usage increased. Disaster regulations required network operators to zero-rate all local educational websites, and when PBOs were finally registered, their number of visitors doubled, proving the value of zero-rating as a tool for greater access.

Few policy instruments are as clean and precise as this one, which will reduce the cost of social innovation in South Africa. It targets communities who are most excluded and puts power in their hands. It stands in stark contrast to the current clumsy obligations on network operators to equip schools with computers, without sufficient systems to keep software updated and prevent theft.

An equality-reducing tool

Critics may argue that this concession could undermine the bigger goal of reduced data costs across the board. Certainly, both Vodacom and MTN have argued that additional spectrum will help them further reduce data costs, but the reality is that income inequality in South Africa is so extreme that without targeted zero-rating, prices will never be lower enough for universal access to vital information for development. Others may argue that zero-rating violates net neutrality by creating preferential access to specific sites, but lost in the mists of that argument is the very reason for net neutrality, namely to ensure equal access to online content.

Network operators may point out that they are already compelled to contribute up to 1% of net profit after tax to a universal service and access fund. The exact percentage is set by the relevant minister and is subject to change. It currently sits at a miserly 0.2%, providing plenty of room to expand service access without imposing onerous new expectations of them.    

Once the licensees are approved, implementation of this condition is not likely to prompt a mad rush for digital content, as data costs are only one constraint in poorer communities. Connectivity and access to smartphones are others. Still, it opens doors that will gradually, but radically, expand participation in the digital economy.