Why is data so expensive in South Africa?

In this article, I want to address a few issues concerning data prices in the country. The first obvious question is why is data so expensive in South Africa? This is an interesting question particularly considering that almost half the population of the country is connected to the internet. Most people who ask this question are referring to mobile data and are likely using Vodacom which is the biggest mobile operator in the country, this is important to note.

The reason why mobile data is so expensive in South Africa is largely because of the expensive infrastructure (e.g. cell towers) the mobile networks have to build the infrastructure to provide coverage nationally not only for data but for voice calls as well. The infrastructure needs to be installed in rural areas, suburbs, cities and all over the country but guess what? The mobile operator does not benefit from all the areas, let me explain. For a lack of a better example, if a tower is installed in a rural area the operator doesn’t make as much ROI (Return on Investment) as they will do in a developed city so in order to compensate for the disparity the bill is passed to everyone equally and the price seems high because few are paying, if more people were using the service extensively the price would go down.

The next question I will address comes from the statement I made earlier that most people complaining about data prices are on the Vodacom network and are referring to mobile data. If data prices are so high why don’t consumers choose the cheapest operator? I mean this sounds silly, right? Why are people constantly flocking to the networks with high data prices (e.g Vodacom), it’s simple it’s not just customer loyalty, these networks have invested a lot in building world class infrastructure to offer fast speeds (LTE, 4G, 3G etc.) and best coverage, this coupled with great packages makes customers want to pay for their premium service.

A personal example lately, I wanted to get internet at home so I looked around for deals but the one I was more interested in was Telkom ADSL because it just made sense to install a line I would be saving hundreds of rands. The first problem I encountered was the difficulty in setting up a new landline connection at home because of my neighborhood so ADSL option was out. The next best thing I thought was the Wi-Fi bundles at Telkom, at the time of writing they had a deal of 24-month contract for 24 months, includes a Wi-Fi router and 10GB (plus 10GB at night) for R395.00. However, it turned out there wasn’t enough Telkom coverage in my neighborhood as well, I then tried Cell C deals and I also encountered the same problem of not enough coverage. Then I went to Vodacom, I was able to get 24-month contract for 10GB (plus 10GB night surfer including router) at R309.00 which was good because I had enough coverage plus it can go to speeds up to 150Mbps. I know I am not the only one, many South Africans choose intentionally mobile networks with high data prices because of the value they get at the end of the day.

Data is expensive now what?

Well good news is that data is falling, data prices will eventually reach acceptable levels and this will be because of a combination of factors: ISP’s (Internet Service Providers) are emerging with great packages especially for home the likes of WebAfrica and Afrihost, Cell C and Telkom are constantly expanding their coverage and infrastructure so that will bring good competition, Government programs like the Tshwane Free Wi-fi and policies will affect the ICT industry, and last but not least as the standard of living increases more people will be connected and actively participate which will make operators decrease their tariffs.