Why Vodacom and MTN must do more
[By Candice Jones]
A 2009 World Bank research report found that for every 10% increase in broadband penetration in emerging markets, the average per capita increase in gross domestic product is 1,2%. It’s a stunning figure, and yet meaningful broadband penetration in SA remains woeful.
That’s why announcements from Vodacom and MTN in the past week about new Internet products aimed at getting more South Africans online are so important. It’s a pity that both companies have fallen short of delivering to the products’ full potential to bridge the so-called “digital divide”.
Vodacom introduced the R749 WebBox; MTN responded days later with its R999 InternetOnTV offering. Both are innovative products that use a television set, instead of a PC (which many poor people can’t afford), to provide Internet access via the mobile networks.
SA is renowned for its innovation in mobile. The country brought prepaid mobile telephony to the world, and its operators transformed the cellphone from a business device used by contract subscribers and put it in the hands of millions of ordinary people.
Households in SA now have more cellphones than they have mattresses or radios. So, to see the country’s two largest mobile operators making an attempt to emulate what they achieved in voice in the data market is incredibly encouraging.
There are many things the operators have got right with their new Internet TV products. But they could have done so much more.
The first problem is the price the operators have attached to the new products. At R749 and R999, they cost more than the set-top boxes consumers will need to receive digital terrestrial television when the country migrates off analogue broadcasts in December 2013.
Government believes it will be necessary to subsidise the cost of those boxes into poorer homes, so is it reasonable to expect strong take-up of the operators’ Internet TV devices? When the time comes to distribute those boxes, I have a feeling government may be surprised at just how many people will request a subsidy.
At first glance, MTN’s product seems even more unaffordable to the poor, but at least it’s allowing customers to buy the product from retailer Jet over six months without incurring any interest. Just ask furniture retailer Joshua Doore what six months interest-free repayments mean to someone who earns less than what fees at some government schools amount to each month.
But the retail prices of the devices is not their most disappointing aspect. Rather, it’s that neither operator has stepped up to the plate to make bandwidth more affordable to the target market.
To the poorest South Africans, the data prices charged by MTN and Vodacom are largely out of reach. Both networks had a chance to introduce “worry-free” browsing and e-mail for a set monthly fee, much like BlackBerry does with its smartphones.
Uncapped offerings aren’t even necessary, just affordable fixed prices specific to these devices that will ensure the majority of users can surf the Web without having to top up their data bundles regularly. They’d lose nothing in the bargain and gain a market that they would never have had before. And, let’s face it, once you’ve had a taste of the Internet, you want more and more.
Don’t get me wrong: it’s fantastic that Vodacom and MTN are thinking about how to bring Internet access to all South Africans. But there’s still a lot more they can and should do. It’s time to think outside the box.