What can South Africans do About High Data Costs?

Mar 07, 2016
Author: Ean Barnard

Money talks! And, the price of data as well.

Can we expect any changes? What can South Africans do about high data costs?

South Africa is a developing country with a developing economy. This means that the average income in South Africa is not that high. Our unemployment rate (February 2016) stands at 25.5%. If we take all this into account, we can say with surety that price is what drives most of the South African markets.

Price first – quality later.

One of the biggest and fastest growing industries in Africa is the telecommunications industry. And to many, it seems already high data costs as well. South African giants like MTN and Vodacom have already acquired significant stakes in African markets. South Africans love their mobile handsets. But, income in South Africa is not that high as in the countries that drive the global telecommunications industry. South Africans sit with a problem. With our lack of infrastructure, data costs – as a percentage of average income – are more expensive in South Africa than compared to developed countries.

Can we expect any changes?

According to this article the global trend - regarding data cost - is pointing to flat rate pricing. This means that service providers charge specific unit prices for specific quantities of data. How the customer uses the data is none of the service provider’s concern. The case is the same with South African mobile networks.

There are 2 major factors that will have an effect on price. The first one is called a price war. The second is inflation.

Unfortunately, these two effects work against each other. Inflation will make things more expensive. The price war between different mobile networks - like Cell C, Telkom Mobile etc. – will drive the price down.

There is, however, one important thing to remember. Most of the lines in South Africa - on which data flows - belongs to the government. This means that all the mobile network companies are renting lines from the government. This makes it hard for innovation to take place in the telecommunications industry in South Africa. Slow innovation means that this industry will not see these data costs fall soon. The fastest way for costs to fall is for a cheapening in the input costs. Seeing as none of the mobile networks own sufficient lines of their own, we can’t expect a change in regards to that soon.

So... about those high data costs?

What can South Africans then do about data costs? Start voting with your feet. You'll have to move over to the cheapest company if you aren’t happy about the price you pay. Educate yourself about all the available options. Remember, an informed customer is an empowered customer.

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