Digital Inclusion: Internet Access in Disguise
Thuto, our business development representative lives and works at the outskirts of Brits, a large town in the North West Province of South Africa. She has a few years old Samsung smartphone and a pay-as-you-go SIM from one of the two largest networks giving her access to 3G mobile broadband. Being an ambitious young lady, she also owns a fairly up-to-date laptop. She is not in a rural area. Voice calls over Whatsapp and Skype sessions should save her travelling costs and facilitate collaboration with business partners. In practice, communication with her can be very challenging not to mention frustrating. Upload speeds are so slow that she cannot use a camera or share a presentation.
The government actively encourages young people to start businesses to address high youth unemployment. Moving to the major business hubs of the country for better infrastructure, is prohibitively expensive for under-funded start-ups and would just add to more over-crowding. Thuto's case illustrates the important role communication infrastructure plays to achieve economic development goals. This includes access and affordability.
Total Cost of Mobile Ownership (TCMO)
In November 2017, The Alliance for Affordable Internet shared findings of their worldwide research of data costs. They conclude:
“This new data — which analyses the cost of 1GB of mobile prepaid data across 59 low- and middle-income countries at the end of 2016 — finds that while affordability continues to improve across the board, the cost to connect remains out of reach for many. Just 19 countries have affordable internet (i.e., meet the “1 for 2” target), and the cost to connect averages nearly 6% of monthly income across the 59 countries surveyed. “
The “1 for 2” target refers to 1GB of data for 2% of income.
The remainder of this post reviews an even more recent study by GSM: “The Mobile Economy Sub-Saharan Africa 2018” analysing the progress made in digital inclusion in this region. One major hindrance is affordability, this study defines as “The availability of mobile services and devices at price points that reflect the level of income across a national population”. It includes the service, activation and handset costs but excludes the charging costs which may add travelling costs to charging points. “ It concludes
“For the 27 countries in the region where data is available, the TCMO for purchasing a handset and 500 MB of data per month represents on average 10% of monthly income, well above the 5% threshold recommended by the UN Broadband Commission.”
The good news are that some governments in the region have decreased taxes on imported devices and broadband while the prices of smartphones have also fallen by an average of 56% in 2017 compared to 2012. Still, in 2017 only 34% of connections are made by using smartphones in contrast to 55% in developing markets. This is expected to rise to 2025.
Relatively high data costs and low income levels are challenges for operators to realise future growth opportunities in currently under-served rural areas and younger demographic groups. Encouragingly, developers are responding by producing less data-intensive apps such as Android Go.
Further, developing app-versions for the use with feature phones and for offline use making online access required less frequently can also improve accessibility and affordability. EXCEED offers both.
According to GSM Intelligence, in 2017 less than 44% of the sub-Saharan population had SIM connections in comparison to just over 60% in the developing world as a whole. This is expected to rise to just over 50% and over 65% respectively in 2025.While a mobile operator is trialling the first 5G service in Africa, the vast majority is either still on 2G, meaning no internet access, or 3G.
“The next couple of years are a key tipping point as 2G connections become a minority of the region’s total connections base. 3G will emerge as the dominant technology in the region over the next few years, accounting for 60% of Sub-Saharan Africa’s connections by the end of 2025.”
The slower expansion of 4G is attributed to the high prevalence of feature phones. Most likely, the majority of mobile subscribers in developed economies will have access to 5G while 40% in sub-Saharan Africa has no internet access at all.
For the foreseeable future, the digital divide is still a reality for many in daily life:
“For many consumers across the region, mobiles are not just a communication device but also the primary channel for getting online and a vital tool to access life-enhancing services. This is particularly true in rural areas, where around half the population live and where the provision of these services by conventional means is constrained by acute funding, skills and infrastructure gaps.”
Increasing Digital Inclusion Through Expanding Access
Finishing on a more positive note, the GSM study highlights three solutions for closing the coverage gap:
Sharing of infrastructure “to optimise asset utilisation, avoid duplication and reduce running costs”; taking a more active form than what is already taking place through independent tower companies partnering with mobile operators.
Partnerships to develop community-based networks, aerial technologies and solar-enabled wholesale partnerships, etc.
Government support through financial incentives, tax-breaks and allocation of low-frequency spectrum