Here's why SA data prices won't come down soon

2016-02-15 10:26 - Duncan Alfreds, Fin24
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Dr Alison Gillwald, executive director of Research ICT Africa. (Duncan Alfreds, Fin24)


Cape Town – South Africans won’t see a dramatic decline in the cost of data while operators focus on return on investment, says a researcher.

According to non-profit Research ICT Africa, the cost for 1GB of mobile data in South Africa has remained static for five quarters.

“This reflects two trends. The growing global trend toward flat rate pricing - the operators just need to get a targeted return on investment - they just selling data at that unit prices and how customers use that is of little concern to them,” Dr Alison Gillwald executive director of Research ICT Africa told Fin24.

“The other is that while 1GB prices have remained static for some time, the introduction of dynamically priced products and bundled products means there are some very high value and some low priced products on the market,” she added.

However, Gillwald was careful to point out that competition within bundle pricing has driven down data cost, allowing more consumer access to the internet.

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READ: Western Cape boasts SA's highest internet usage

Research ICT Africa data shows that while voice still makes up the lion’s share of revenue for operators, data is growing fast as a revenue stream.

The organisation’s recent presentation to the parliamentary portfolio committee of telecommunications and postal services showed that data revenue at Vodacom has climbed to R13.5bn or 29% in 2015 from R4.3bn (10%) in 2010.

At MTN, data jumped from 10% to 32% over the same period, reflecting the trend of mobile being the primary channel to deliver broadband, said the NPO.

According to Research ICT Africa’s recent study into mobile broadband, Vodacom and MTN collectively have 80% market share in South Africa, but charge more for mobile access.

The organisation found that Vodacom charges R122 for an OCED basket of calls and SMSes, MTN charges R76, and Telkom Mobile charges R53.

In SA, mobile users spend about 24.7% of income on mobile services, well above the International Telecommunications Union (ITU) guideline of 5%.

Gillwald said that South Africans were set for continued high priced data, despite national policy aimed at lowering the cost of communications.

“Certainly we are not on track to meet the affordability targets set in SA Connect, which used the then Department of Communications, Vision 2030, which refers to 5%.”

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