Data is not a luxury but a necessity
South African network providers MTN and Vodacom have been exploiting their customers for decades, from high SMS prices to exorbitant data costs. They need far more than just a slap on the wrist.
Author:
9 April 2021
The unequal footing on which grade 1 pupils in various schools in South Africa started their education in 2020 could have devastating effects for them and the country if not properly addressed. The academic year was one of the most challenging in history with the Covid-19 pandemic further widening the inequality gap that makes South Africa one of the most unequal societies in the world.
Schools and families that are well off experienced mostly minor speed bumps and inconvenience as the pandemic forced changes in how they teach and study. But for impoverished families and schools it was a challenging time, heightened by the exorbitant data prices that made homeschooling tough and in certain households impossible.
For this reason, and many others, data prices have to keep falling to be accessible to most of the public. Some positive steps in this direction have been taken, not because of the generosity of the country’s two biggest network providers but because the Competition Commission forced them to do so after revealing that their data pricing is “anti-poor” and “exploitative”.
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Anti-poor and exploitative. These two words are important in analysing and understanding the problem in order to find a long-lasting solution that will benefit the citizens of the country hardest hit by the telecommunication giants’ conduct.
The pandemic showed just how anti-poor and exploitative these prices are. With schools closed in an effort to curb the spread of Covid-19, teachers were forced to rethink how they teach. The internet replaced the classroom with learning taking place online. Those with a stable internet connection thrived while the majority of impoverished children were left behind. Children in grades R, 1, 2, 3, 6, 10 and 11 lost 32% of the time they would have spent in the classroom were it not for the lockdown. That’s a huge amount in a critical stage of learning, especially in the primary phase where the foundation is being laid and in grade 11, which prepares learners for matric.
There were several measures to compensate for that time, but as education expert Ursula Hoadley wrote in her paper Schools in the Time of Covid-19: Impacts of the Pandemic on Curriculum, “most of the provincial responses, at least initially, were web-based. Initial efforts at providing television and radio offerings were piecemeal, uncoordinated, poorly publicised and, for the lower grades especially, unconnected to the curriculum”.
Being left behind
It’s not far-fetched to assume that many children were left behind because of the pandemic. For them to catch up, it will take dedicated and patient teachers to first work on the curriculum that was missed last year and then move on to the one for this year. While this is happening, those who had access to the internet will be getting further ahead, widening the distance between them and those who were left behind. It’s a crisis in a country with such high levels of inequality.
In South Africa, where people still struggle to access the most basic needs such as electricity, clean water and decent housing, the internet is sadly viewed as a luxury rather than the necessity it is. This is why there isn’t a strong push to ensure that more families can access it. The 2018 General Household Survey found that only 10.4% of South African households have access to the internet at home. This makes cellphones an important tool, as slightly more than 60% of the population use them to access the internet.
This means more than half of the population is heavily dependent on corporate network service providers to access information, learning materials, entertainment and other valuable components of the internet. But when the price of accessing that world is exorbitant, cellphones are just a basic tool to reach people.
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Applications like WhatsApp play a critical role in how we communicate. Social movements and unions use it to organise. When the pandemic hit, it was even more important, along with platforms for video communication like Zoom, as traditional means of organising were unsafe and public gatherings banned. Schools also used WhatsApp and Zoom to share information and hold classes. But to be able to participate meaningfully in those platforms one needed data, and plenty of it to use the video platforms.
Vodacom and MTN have fought the lowering of data prices at every turn. These companies have frustrated the bungling and toothless Independent Communications Authority of South Africa (Icasa), which at one point was accused of not following its own policies in its attempts to get the two giants to stop exploiting a helpless public.
Icasa’s lack of bite is part of the reason the public has been ripped off for years. Before the advent of smartphones, telecommunications companies made most of their money on phone calls and the short-message service. Even then they were exploiting their customers.
The great rip-off
As far back as 2012, journalist, activist academic and now head of journalism, film and television at the University of Johannesburg Jane Duncan laid bare the “great South African cellphone rip-off”. “Vodacom and MTN derived huge profits from the mobile termination rate (or interconnection rate), which is the rate that one company charges another for terminating a call on their network. This rate is estimated to be between 25c and 40c per minute, yet the costs charged by the cellphone companies have been far higher,” she wrote.
“In the initial interconnection agreement between Vodacom and MTN, the interconnection rate was set at 20c. When the third cellular network, Cell C, was introduced in 2001, both cellphone companies, with the consent of the regulator, increased the interconnection rate by 500% to R1.23. This move effectively secured Vodacom and MTN’s dominance as a duopoly and made it extremely difficult for competitors to grow.”
The same has applied since data became king. MTN and Vodacom, which dominate telecommunications in the country, charge exorbitant prices. Before the intervention of the Competition Commission, MTN and Vodacom charged around R150 for 1GB. Even with the prices falling, data is still expensive. The cheapest 1GB offering costs R85 and the most expensive is R99.
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This is a lot of money in a country where the minimum wage was increased to just R21.69 an hour in March. A quarter of the population live on less than R19 a day and about 50% live on less than R41, as revealed by the House Affordability Index compiled by the Pietermaritzburg Economic Justice and Dignity Group.
The exploitative nature of these companies can be seen in the way they charge far more for smaller bundles than bigger ones. The majority of impoverished people buy data in small bundles because buying in bulk is simply not an option financially.
The results of a comparative Icasa study on how much Vodacom and MTN charge for data in the various countries they operate in highlighted their exploitative nature in South Africa. In 2017, MTN charged more for 500MB of data in South Africa than it did in Ghana, the Ivory Coast, Uganda and Zambia.
For the 1GB bundle, it had the third most expensive offering – behind Cyprus and Botswana – and charged way more than Afghanistan, Benin, Botswana, Ghana, Iran, the Ivory Coast, Nigeria, Rwanda, Uganda and Zambia. For 2GB, only the MTN subscribers in Cyprus were paying more than their South African counterparts – and MTN is a South African company. Vodacom had the most expensive data prices in South Africa for 500MB, 1GB and 2GB compared with the other countries in which it operated.
Milking the consumer
In Vietnam, which has the world’s fourth-lowest data prices, Wi-Fi is freely available to citizens in every restaurant or retail outlet. A data package of up to 30GB costs as little as R189. India has the lowest prices at $0.09 for 1GB, whereas South Africa ranks 136 for data prices globally.
It’s no surprise then that 30% of MTN’s revenues in 2019 (R45.447 billion) came from South Africa, behind the most populous country on the continent, Nigeria, which accounted for 30.8% of its revenue (R46.696 billion).
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The pandemic has affected many spheres of our lives, profoundly changing how people communicate and work. During this period, the world has been at the mercy of telecommunication companies. Those who have lost their jobs need the internet to look for work, and students need it to study. With the closure of theatres and the virus still raging, workers in the entertainment industry have taken their craft online – from virtual shows to theatre pieces on WhatsApp. For many livelihoods to be saved, data prices have to be affordable.
The introduction of zero-rated educational portals is a good step, but more needs to be done to ensure the internet is truly accessible. The companies holding all the cards will not do it out of goodwill. We need a strong regulator that will not only stop this exploitation but also severely punish companies that are guilty of it.
Being ordered to do the right thing or given a slap on the wrist is not enough, nor does it benefit the people who have been exploited for years. Holding these companies accountable will go a long way in the fight against inequality.
