Wholesale Mobile Data Product Sorely Needed in SA Market, Says ISPA

26 February 2015

The Internet Service Providers’ Association (ISPA) has issued a further call for SA telcos to take bold action to bring down the costs of mobile broadband by introducing wholesale mobile data products.

ISPA argues that the absence of a wholesale mobile data offering constitutes a lost business opportunity for mobile operators and an obstacle to deepening broadband penetration.

“In South Africa, mobile devices are the primary gateway to the business and social opportunities offered by the Internet,” says ISPA chair Graham Beneke. “High prices for mobile broadband will continue to act as a brake on Internet penetration in the country.”

“One only has to look back several years ago when to the Blackberry uncapped mobile package was first launched. It was instantly popular amongst SA mobile users, many of whom used the package as the only way they accessed the web. There is clearly a demand for uncapped mobile data,” adds Beneke.

Axxess Mobile, for example, was amongst the first to offer an uncapped mobile data product to the market with such consumer-friendly innovations as three month roll-over and no out-of-bundle rates. AfriHost is another example of an ISP offering uncapped mobile data.

Research by World Wide Worx shows that mobile-data spend in South Africa grew by 50 percent between 2010 and 2012, and that more than half (52 percent) of all Internet access is via cellphones only. A subsequent study showed that while smartphones continued to be adopted, consumers were increasingly turning to Wi-Fi hotspots for connectivity—arguably in response to high data costs.

More to the point, the World Bank has long since established the correlation between broadband penetration and gross domestic product (GDP): every 10% increase in broadband penetration increases economic growth by 1.38%.

“This link between GDP growth and broadband penetration is one of the reasons the government set the target of 100 percent broadband coverage by 2020, and why ISPA supports that target,” Beneke says. “And if the majority of people are going to be accessing the Internet through mobile devices, then the cost of mobile broadband is critical in achieving that target—and starting to provide economic opportunity for our country.”

ISPA’s argument is strengthened by the way in which efforts to force the regulator to enable competition in the fixed-line broadband space have borne fruit, with strong competition between Internet service providers driving the price down, leading to better packages for consumers. As a result, uncapped ADSL or large, unshaped capped ADSL accounts have become the standard in the fixed-line broadband market.

“Opening up the ADSL market to competition has created business opportunities for providers and the consumer has benefited hugely,” Beneke says. “We believe that ICASA should take the necessary action to enable a simple resale model for mobile data to stimulate the same sort of consumer-friendly competition. It seems like regulatory pressure is necessary to spur the introduction of the necessary wholesale product to create this new market.”

When a genuine wholesale offering is made, such as MTN and Afrihost jointly developed, consumers receive immediate price benefits and service innovation associated with the ISP market.

In conclusion, Beneke urges consumers begin creating “pull” by demanding uncapped data offerings from service providers. “As voice and data converge on the Internet protocol platform, differentiated voice and data rates are becoming increasingly anomalous—we need to start moving towards one price for voice and data, and it has to begin with a genuine wholesale market in mobile data.”