South Africans pay some of the highest rates for data in Africa, even as the country has one of the continent's most competitive telecommunications sectors.
Over the past few months, the #DataMustFall movement has seen consumers demanding for cheaper data, but it seems providers are slowly losing touch with their target market, blaming the high costs on operational expenses that are then passed down the value chain.
Panel Discussion at 12th ICT Summit. (L-R: Arif Hussain Former CEO: FibreCo; Puleng Kwele CEO: Broadband InfraCo)
This was one of the observations made in a panel discussion hosted at the 12th Annual South African ICT Summit, hosted in East London. The discussion also focused on alternatives that the ICT sector could take up in order to meet the demands for lower data costs.
Firstly, low data costs could be achieved through infrastructure sharing, where telecommunication companies use the same hardware to deploy their services. Through sharing physical infrastructure, operators can lower the cost of putting up infrastructure, thereby collaborating rather than competing for access. Through this model, operators providing different services, such as Telkom South Africa (landlines) and MTN (mobile) can share infrastructure without interfering with each other's operations.
Another option is open access, also known as the carrier-neutral or network-neutral model, where an independent party such as a government or a corporation sets up infrastructure that is then used by multiple telecommunication carriers and service providers. One such example of this is Project Link, where Google lays fiber-optic cables which it then leases to internet service providers.
Arif Hussain, CEO of FibreCo, states that in order to provide taster and cheaper broadband, South Africa needs to upgrade its infrastructure. Access is needed in rural areas, and to do this he recommends a rural broadband rollout, which will increase the 27% broadband penetration rate. Due to the relatively high cost and low demand, he recommends the sharing of infrastructure as well as bandwidth.
To further support Kwele’s opinion, Grant Maree, CEO of Vast Networks, expressed the need for South Africans to be educated on open access and the possibilities it provides.
A change of tact is also needed. Rather than focusing on expensive and resource-intensive fibre-to-the-home connections, more agile WiMAX and wifi connections can be deployed to save costs, especially in areas that have a population of over 1 million such as townships.
The reason why banks have invested mostly into companies that provide fibre to the home instead of wifi is because they see the financial benefit rather than the ability to connect as many people as possible. Arif Hussain, former CEO of FibreCo
Mr Hussain further states that focusing on the most profitable solutions rather than the ones with the biggest reach does not fix the problem, as it widens the digital divide that exists in South Africa.
The key to solving this issue, Ms Kwele adds, lies with those making the investment decisions. They fail to see the possibilities that semi-rural and rural areas present, and thus a key group of unconnected South Africans is left out.
Grant feels that investing in these areas requires bravery. There is a lot of politics involved and because it hasn’t been done before, it makes the process very experimental.
The challenge of connecting South Africans and keeping the cost of access down will need innovative solutions, including those discussed on the panel. This needs all stakeholders - the government and the private sector, to work together and invest in the infrastructure needed to get everyone online. That way, a bigger market will see greater revenues, meaning that cheaper data for all could become a possibility.