#DataMustFall right now

The lowest earners can spend up to 20% of monthly income on airtime. SA data costs are 16th highest out of 47 African countries

If you want to get anyone’s attention in SA these days, start a movement with a hashtag that ends in “must fall”. That’s what seems to have happened last week, after years of anger about overly expensive cellular data spilled over with the #DataMustFall campaign. There had been innumerable complaints and public outcries, but the tipping point appears to have been an impromptu tweet by radio DJ Thabo Molefe, whose rants on Twitter seem to have spurred the lethargic process into something that might — just, almost, perhaps — look like progress.

Tbo Touch, as he’s known, is scheduled to address the parliamentary portfolio committee on telecommunications & postal services this week about why data costs are so high.

SA has a deeply iniquitous cost structure when it comes to data use. After a consumer finishes his or her data bundle, each additional megabyte is charged at R2. Add that up, and it becomes dangerously expensive. Many unwitting people have ended up with thousands of rands on their bills because of it. Meanwhile the networks blithely profiteer from this inevitable overrun.

“SA’s cheapest 1 GB data [bundle] places it at 16th out of 47 African countries,” think-tank Research ICT Africa’s executive director, Alison Gillwald, said this week. “All operators, except for Telkom Mobile and MTN, advertise 1 GB of mobile data for prices around the R150 mark ... other large markets, Egypt, Kenya and Nigeria, have better data prices,” she said in a written submission to parliament.

Tanzania, meanwhile, offers the cheapest 1 GB in our region, at US$0.89 (R12.50).

Research ICT Africa estimates that users in the “lower-income category are spending significant portions of their income, around 20%, on relatively small amounts of data (1 GB)”.

Industry veteran Andrew Fraser has directed his anger at Vodacom and MTN in a tweet: “Can you explain why [out of bundle] data costs R2,000 per GB? #DataMustFall.”

Every time I have asked senior network executives why they penalise their customers with onerous out-of-bundle rates, they have offered meaningless and invalid arguments. The one I’ve heard most often — usually said with a straight face — is that they are trying to prompt their customers to purchase data bundles.

But why penalise your customers if they don’t? Why do networks hate their customers so much that they punish them for using data on their networks when their bundles run out? Surely that’s what you’d like from a customer — to use more of the product you’re selling?

Another key complaint from consumers is that networks have expiry dates on the monthly data people buy, usually within 30 days of the month end.

It has prompted legitimate concerns that this practice might contravene the Consumer Protection Act: if you’re buying something virtual and intangible, why must it have an (arbitrary) expiry date?

The obvious answer is that networks are hanging onto outdated business models, introduced when the R2/MB rate was established.

Until operators are forced by the Independent Communications Authority of SA (Icasa) to reduce it, it’s unlikely that they will willingly sacrifice another iniquitous cash cow.

It was only after strict rulings from Icasa that the cost of voice calls dropped significantly over the past few years, as the profitable interconnect fee between operators was brought down.

The interconnect fee is what operators charge each other to complete a phone call from another network. It’s a hangover from the vastly profitable early years of the cellular business.

But revenue from voice is declining as datacentric mobile users spend more time on social media, watching videos and text chatting, than on calling.

It’s a new data world. It’s time the networks stopped profiting from the past.