MTN offers cheap smartphone data - with a catch

2015-03-03 10:45 - Duncan Alfreds, Fin24
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MTN has launched a lower cost data offer. (Duncan Alfreds, Fin24)


Cape Town - MTN has launched a lower cost data bundle package but with a shorter expiration date to encourage data consumption on its network.

On Monday, the mobile operator announced a fortnightly and weekly data bundle offer aimed at people who feel that a monthly bundle "does not match their usage requirements".

The weekly bundles start at R7 for 50MB, R12 for 100MB, R29 for 300MB, R39 for 500MB and R59 for 1GB and the promotion will run for six months, said MTN.

In addition, the operator said that its out of bundle data rates are 99c per megabyte, as data demand grows at rates that should see it overtake voice as the revenue generator for mobile operators.

According to the Cisco Visual Networking Index Global Mobile Data Traffic Forecast for 2014-2019, mobile data traffic would grow at an annual rate of 63%, eventually accounting for 32% of all data traffic by 2019, versus just 13% in 2014.

Broadband access

That means mobile data will grow faster than fixed line connections which, despite a number of initiatives, have remained largely flat due to cost and accessibility challenges.

According to the former department of communications' presentation to the Portfolio Committee on Communications in 2013, 33.3% of the South African population had internet access.

However, the department (now renamed the Department of Telecommunications and Postal Services) submitted ambitious targets of 50% access at 5mbps by 2016, 90% by 2020, and 100% at 10mbps by 2030.

The government has advanced the idea of open networks to drive broadband access in the South Africa Connect: Creating Opportunities, Ensuring Inclusion South Africa's Broadband Policy.

"Neither the Telkom nor the Broadband Infra Co networks are currently available on an open access basis. The current private sector National Long Distance (NLD) projects may have elements of wholesale and open access, but do not presently address demand beyond the main centres," says the document.

In the meantime, mobile broadband continues to spike as smartphone prices decrease.

"We already work(ing) with the device manufacturers and there are a number of issues," MTN Group president Sifiso Dabengwa told Fin24 recently regarding the challenge of reducing pricing.

Cheaper smartphones

"The first thing is that at this moment in time, there just isn't a data enabled 3G device for less than about $30. That's really the problem," he said.

And people are using those cheaper smartphones to access more data.

According to data from Ericsson's Mobile Data Traffic Growth report for 2013 to 2019, the region's data appetite is huge and expected to grow at 65% to 2019 and beyond.

Data demand is set for exponential growth. (Duncan Alfreds, Fin24)

Put into perspective, mobile data in the region was at 37 000 terabytes (TB) per month in 2013, and that will jump to 76 000TB by the end of 2014, on its way to a mammoth 764 000TB by the end of 2019.

For mobile operators though, the question of data expiration remains a challenging one in SA.

What complicates the process is that operators also have to buy data - typically from wholesale providers - and they need to calculate load on the network to ensure that they make accurate purchasing decisions.

"If I had a clearer view that it is finite - it's going to last a week or it's going to last a month - it just makes it much more efficient in terms of the overall process in the sense that you will buy what you need to eat.

"If I don't know when you're going to consume it, it makes it very difficult for my planning of the infrastructure, especially once you start getting into customer numbers above 10 to 15 million," Dabengwa said.

Watch MTN Group President Sifiso Dabengwa explain why mobile data expires in this video:

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