Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      Public money, private plans: MPs demand Post Office transparency

      13 June 2025

      Coal to cash: South Africa gets major boost for energy shift

      13 June 2025

      China is behind in AI chips – but for how much longer?

      13 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025

      10 red flags for Apple investors

      13 June 2025
    • World

      Yahoo tries to make its mail service relevant again

      13 June 2025

      Qualcomm shows off new chip for AI smart glasses

      11 June 2025

      Trump tariffs to dim 2025 smartphone shipments

      4 June 2025

      Shrimp Jesus and the AI ad invasion

      4 June 2025

      Apple slams EU rules as ‘flawed and costly’ in major legal pushback

      2 June 2025
    • In-depth

      Grok promised bias-free chat. Then came the edits

      2 June 2025

      Digital fortress: We go inside JB5, Teraco’s giant new AI-ready data centre

      30 May 2025

      Sam Altman and Jony Ive’s big bet to out-Apple Apple

      22 May 2025

      South Africa unveils big state digital reform programme

      12 May 2025

      Is this the end of Google Search as we know it?

      12 May 2025
    • TCS

      TechCentral Nexus S0E1: Starlink, BEE and a new leader at Vodacom

      8 June 2025

      TCS+ | The future of mobile money, with MTN’s Kagiso Mothibi

      6 June 2025

      TCS+ | AI is more than hype: Workday execs unpack real human impact

      4 June 2025

      TCS | Sentiv, and the story behind the buyout of Altron Nexus

      3 June 2025

      TCS | Signal restored: Unpacking the Blue Label and Cell C turnaround

      28 May 2025
    • Opinion

      Beyond the box: why IT distribution depends on real partnerships

      2 June 2025

      South Africa’s next crisis? Being offline in an AI-driven world

      2 June 2025

      Digital giants boost South African news media – and get blamed for it

      29 May 2025

      Solar panic? The truth about SSEG, fines and municipal rules

      14 April 2025

      Data protection must be crypto industry’s top priority

      9 April 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » Alison Gillwald » Digital equality: South Africa still has a long way to go

    Digital equality: South Africa still has a long way to go

    By Alison Gillwald7 March 2020
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp
    The author, Alison Gillwald, says free “lifeline” data won’t reduce digital inequality

    In Cyril Ramaphosa’s state of the nation address earlier this month, the president highlighted the fact that the Competition Commission had instructed mobile operators to adjust their pricing in a bid to reduce digital inequality in the country. He referred positively to interventions aimed at mitigating inequality.

    These are likely to have mixed outcomes.

    The commission’s decision to force mobile operators to remove the “poverty premium” on low-denomination, prepaid mobile bundles has been widely welcomed as something the telecommunications regulator should have done years ago.

    A large number of the beneficiaries of the lifeline service who are capable of paying for the service will get the welfare benefit

    The “poverty premium” refers to the fact that poor people pay more than wealthier people for data. This happens in two ways. Firstly, prepaid data in South Africa costs way more than post-paid or contract data per megabyte. Logically, the price for it should be lower because it’s being paid up front, but it isn’t. Secondly, the price of low-volume, small-value bundles, typically purchased by poor people, compared with the high-volume packages, usually purchased by wealthier users, are highly discounted.

    Even if this may, arguably, inhibit the kind of product innovation that brought people online by offering micro-products, the intervention in the market is warranted on public interest grounds. And it is likely to have the intended outcome of making data more affordable for the poor.

    The president also referred to the free “lifeline” data package — a certain amount of data daily at no cost, proposed by the commission. The premise for this is much like the free basic water policy in the country which gives household 6 000l before charges kick in.

    ‘Free data for all’

    The “lifeline” package was hailed on public talk shows as “free data for all”.

    But adopting this in the far more complex telecoms infrastructure market is likely to produce some unintended consequences. In particular, it won’t reduce digital inequality. In practice the “free” lifeline data package will be given to everyone with a prepaid Sim card (85% of the data market) as the administrative costs of identifying the needy to provide the subsidy to is too high.

    This will produce a classical free-rider problem. A large number of the beneficiaries of the lifeline service who are capable of paying for the service will get the welfare benefit.

    There is also considerable evidence that the costs of mandatory user subsidies are transferred to end users’ prices. Levies like this are not paid from operator surpluses. Instead, they are built into the cost of services. Unless tightly monitored and regulated, this in turn drives up the price of services for users.

    From a public interest policy perspective, cross-subsidisation is justifiable if the subsidy and cost allocation is transparent. And if the increased cost being paid by those online, for example, is used to subsidise the extension of networks or services to get the rest of the population online. This is what happened in classical universal service regulation to get networks extended into remote areas.

    But the lifeline subsidy does not bring more people online. It subsidises the cost of data for those who are already online — rich and poor. The lifeline subsidy may enable those who are already connected through smart devices to use data more optimally to enjoy the benefits of being connected, such as financial inclusion, information gathering and job-seeking, but it does not assist with bringing the 50% of South Africans who are offline, online.

    There are alternative ways of subsidising data and bringing people online. One example is providing free public Wi-Fi at all public buildings

    The commission focused on the negative impact of data prices on consumers. And there is certainly evidence that price affects usage — in South Africa usage is way below the average in similar-sized economies with less inequitable income distribution.

    In the Research ICT Africa After Access 2018 survey of 10 African countries, including South Africa, non-users said that the price of smart devices was at primary reason for people not being connected. For those that were connected the cost of data was identified as the reason for their sub-optimal use.

    This shows that reducing data prices without attending to the cost of the devices (and other problems once people are connected, such as the lack of digital literacy) does not redress digital inequality.

    Mirrored online

    There are other reasons, too. Analysis of the 2018 survey shows that access and use of the Internet, across all countries, including South Africa, is determined by education and the corollary indicator of income. The survey showed that education, income and locational inequalities are simply being mirrored online — arguably amplified — as the economic and social value of being digitally networked increases exponentially.

    There are alternative ways of subsidising data and bringing people online. One example is providing free public Wi-Fi at all public buildings. This would enable those who were unable to pay for airtime to go online by accessing a public Wi-Fi point. This was proposed in the South African broadband plan, SA Connect, but was never implemented in the manner and scale intended.

    With successful Wi-Fi initiatives at city level, price-sensitive users are increasingly supplementing the purchases of their low-denomination bundles with public Wi-Fi. In the 2018 After Access survey, in South Africa 32% of Internet users indicated that they used public Wi-Fi at least once a month.

    Policy needs to address the underlying human development challenges if people are to be equitably brought online

    Of course, those who could afford data services would also be able to access the free Wi-Fi. But they wouldn’t get in automatically. They would need to make the effort of getting to a free public access point, which price-sensitive users do.

    Another option is zero-rating public interest services. “Zero-rating” is when no price is charged for the data used to access and use an application or website. This is proposed by the commission for government, educational and other public interest websites.

    But this is sub-optimal. Ideally, zero rating such sites should be in addition to some free public Wi-Fi. The poor should also be afforded choice and the benefits of access to the open Internet.

    Policy needs to address the underlying human development challenges if people are to be equitably brought online as well as enabled to shift from meagre passive consumption, to transaction-cost-reducing online activities, and even to enhancing their well-being and livelihoods.

    Policies that don’t address these challenges will simply perpetuate existing inequalities.The Conversation

    • Written by Alison Gillwald, adjunct professor, Nelson Mandela School of Public Governance, University of Cape Town
    • This article is republished from The Conversation under a Creative Commons licence


    Alison Gillwald Competition Commission Cyril Ramaphosa top
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleTech festival SXSW is cancelled
    Next Article Coronavirus: Second South African case confirmed

    Related Posts

    Telecoms operators back BEE reforms – but warn against favouritism

    5 June 2025

    Starlink storm: BEE reforms fuel tensions in Ramaphosa’s GNU

    26 May 2025

    Sita says it welcomes SIU corruption probe

    26 May 2025
    Company News

    Huawei Watch Fit 4 Series: smarter sensors, sharper design, stronger performance

    13 June 2025

    Change Logic and BankservAfrica set new benchmark with PayShap roll-out

    13 June 2025

    SAPHILA 2025 – transcending with purpose, connection and AI-powered vision

    13 June 2025
    Opinion

    Beyond the box: why IT distribution depends on real partnerships

    2 June 2025

    South Africa’s next crisis? Being offline in an AI-driven world

    2 June 2025

    Digital giants boost South African news media – and get blamed for it

    29 May 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.