Poor pay a 'poverty premium' on mobile data

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 17 Oct 2018
Koketso Moeti, social activist and executive director of
Koketso Moeti, social activist and executive director of

Community advocacy organisation,, says South Africa's poor pay a "poverty premium" on mobile data and is demanding an end to price discrimination in the industry.

This morning, the group gave its oral #DataMustFall submission at the Competition Commission's (CompCom's) Data Services Market Inquiry in Pretoria. The CompCom is holding public hearings from 17 to 19 October to look into the state of competition in the data services sector.

"The highly connected have access to a competitive market of mobile networks, fixed-line and fibre networks, and a variety of Internet service providers (ISPs). The less connected, who are low-income consumers making up the majority of the population, are largely or solely dependent on mobile network operators for their access," says executive director, Koketso Moeti.

"Mobile network operators use price discrimination, charging more for small data bundles. The poor pay a 'poverty premium' at rates that are up to 11 times higher than those charged to higher income users who can afford to buy large data bundles," she adds.

Mobile diaries

Moeti presented along with Indra de Lanerolle, a visiting researcher and adjunct lecturer at the University of the Witwatersrand and also the director of JamLab. De Lanerolle presented findings from JamLab's research, the Izolo mobile diaries, which looked at how low income consumers use data.

The researchers collected mobile diaries of more than 80 people in three locations in urban and rural SA. They found mobile phones are a vital part of these people's lives; however, the less connected consume airtime and data in very small quantities. The diaries also suggest the communication links between the less connected and the wider world are fragile, and mobile phones are used only "with complex and frugal management".

"Diarists described many strategies to minimise the costs of their connectivity, and to manage their cash flows, including staying up late at night to make use of cheaper rates, buying airtime and data in very small quantities, and leaving their data connections off except occasionally to check messages," the report says.

"The fragility of their connections and the frugality of their mobile practices mean their communications are largely restricted to close social networks. People tend to use WhatsApp or Facebook and belong to messaging groups of family, friends and church groups. They rarely explore the broader landscapes of the World Wide Web to search for information (on Google or YouTube, for example) or to visit national news sites."

Regulatory recommendations

Moeti and De Lanerolle urgently recommended the commission regulates to limit the spread of pricing between small and large data bundles and also between contract and prepaid customers.

"Abolish out-of-bundle pricing, which is disproportionately paid by low-income consumers. We also urge the commission to develop new price and affordability indices that take account of sachet pricing and avoid measures of affordability that use national average incomes," Moeti says.

The community advocacy organisation, primarily focused on low-income black women, also believes operators should be required to provide and publish data on volumes of purchases of data at their different price points to enable regulators and others to monitor actual prices paid.

The group believes that winning the #DataMustFall campaign "is not only a small step challenging an economic system built on profiteering from the poor, but could also open the door for millions more people to communicate, access information, services and opportunities which are currently being enjoyed by a few".

Price probe

Since 2016, South Africans have been calling for mobile data prices to come down under the social media banner #DataMustFall.

The CompCom in August 2017 announced it would run an inquiry into the high price of data services in SA, which officially kicked off today. In June 2018, the Independent Communications Authority of South Africa (ICASA) held its own public hearings on the cost to communicate in SA.

The CompCom says it is conducting the inquiry "to understand the general state of competition in the data services sector". The commission has reason to believe there are features in the sector that may prevent, distort or restrict competition.

The focus will include whether prices are higher than they ought to be; the causes and remedies for high prices; and the impact of data prices and access to data on lower income customers, rural customers, small businesses and the unemployed.

Other presenters expected to make submissions at the three-day hearings include: Vodacom, MTN South Africa, Telkom, Cell C, Right2Know Campaign, Research ICT Africa, DG Murray Trust, Internet Society of South Africa, Internet Service Providers Association, Afrihost, Internet Solutions, African National Congress, Inkatha Freedom Party and Department of Telecommunications and Postal Services.

The inquiry is being chaired by the commission's chief economist, Liberty Mncube, and he will be joined by two other members: chief legal counsel, Bukhosibakhe Majenge, and head of inquiry technical team, Jason Aproskie.