The government plans to give every household 50 gigabytes (GB) a month in the next three years, up from the 10GB it promised last month – a move that is set to leave a deep hole in the pockets of telecommunications companies.
This detail is contained in the National Infrastructure Plan 2050 gazetted on Friday.
The gazette states: “Government e-enablement will be leveraged to promote a digital society and universal connectivity. There will be a target of 10GB to home by 2023/4 and 50GB to home by 2025/6. There will be an accelerated focus on enhancing service delivery with eHealth and eEducation.”
Communications Minister Khumbudzo Ntshavheni had many South Africans salivating last month when she said the government will give every household in South Africa 10GB of data every month – regardless of the family’s income. “Data has become a new utility like water and electricity that our home needs,” she said.
The high cost of data in the country saw the Competition Commission in 2017 initiate a market inquiry into data services as it had reason to believe there were features in the sector that “prevented, distorted or restricted competition”.
Mobile operators, including Vodacom, MTN, and Cell C, started reducing their mobile data prices in 2020 after the commission’s damning final report on the data services market inquiry in 2019. The watchdog found that a duopoly of the two leading mobile operators – MTN and Vodacom – allowed them to charge excessive prices for data.
Telecoms companies have raked in billions in revenue from data, which has, over the past decade, overtaken voice calls as the money-spinner for telecoms companies.
“Between 2015 and 2019, there was an investment in telecommunications of about R177-billion, driven by the private operators. The public sector has lagged rather than led in this domain. This poor progress in digital inclusion is due to the network’s high prices even as the network is available, ” the gazette reads.
Former Telkom boss Sipho Maseko has already warned the plan to give households 10GB every month might choke the sector and its profitability.
The gazette also noted only 970 government sites, mainly clinics and schools, have been connected so far and significant progress is needed in this area.
“A further 35 211 government sites still need to be connected to achieve the goals of South Africa Connect. It is estimated that doing this would cost a minimum of about R30-billion and potentially up to R80-billion, depending on the pace and design of the programme.”
The government has also set a target of connecting 80% of schools by December 2022. Prices of data in the country are set to decrease after the auction of the high-demand spectrum kicked off on Tuesday. Spectrum refers to the frequency network operators use to transmit information, such as 3G or 4G. Network operators have often blamed the lack of spectrum for the high cost of data.
The Independent Communications Authority of SA (Icasa) said on Friday the ongoing spectrum auction had raked in more than R8-billion.
Auction for spectrum is expected to continue tomorrow.
Data revenues of mobile companies:
- MTN in its financial results for the year ended December 2021 reported data revenue of R16.4 billion in its SA operations. The group also spend R10 billion on its network infrastructure in its home market.
- Vodacom spent R10.1 billion on its SA infrastructure in the year ended March 2021. The company said that it has 21.1 million data customers on its network, with smart devices up 13.3% to 23.5 million and 4G devices increasing 26.8% to 16.4 million.
- Telkom in its six-month ended September 2021 results said it brought R6.3 billion in mobile data revenue. The group also invested R3.6 billion in its network.
- Cell C in its interim results for the 6-month period to June 2021 said it would need to spend more than R5-billion in capital expenditure annually to build a comparable network.
According to Broadband Wherever 50GB is roughly enough data for any one of the following:
- 2 500 hours of browsing;
- 10 000 music tracks;
- 600 hours streaming music;
- 300 hours of Skype;
- 400 app downloads;
- 50 SD movie downloads; and
- 20 000 e-mails.
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