One graph that shows why people say Vodacom and MTN are too expensive

While the ultimate goals of #DataMustFall were misguided and its origins dubious, the sentiment that spurred it on was genuine. South Africans feel ripped off by their cellular service operators and want a change.

Research from adjunct professor Brian Armstrong, the chair in digital business at Wits Business School, has quantified this feeling by comparing the prices of data bundles across South Africa’s mobile network operators.

Armstrong plotted the price of prepaid data bundles, contract packages, and fixed LTE services. He compared the prices of bundles ranging from 10MB to over 100GB.

The trend lines of the graphs revealed the following:

  • Prepaid data prices are around double the price (per-MB) compared to contract data prices.
  • Contract data is around double the price (per-MB) of data on Fixed-LTE packages.
  • Prices get cheaper very fast as you buy more data. There is a threefold reduction in per-MB price for each tenfold increase in the size bundle or plan.
  • Entry-level prepaid bundles are roughly 50-times more expensive than large contract plans.
  • Entry-level prepaid plans are also around 200-times more expensive per-MB than Fixed LTE.

Armstrong concluded that mobile data pricing in South Africa is not necessarily expensive on average, but entry-level plans, which are most relevant for vulnerable sectors of society, are incredibly expensive.

He suggested that price rebalancing between entry-level and high-end price plans could resolve the problem.

This echoes statements from industry analyst and MD of World Wide Worx, Arthur Goldstuck, who has said that mobile network operators are punishing the poor for being poor.

Goldstuck spoke out in support of regulatory intervention, arguing that the cellular networks would have no interest in changing their business practices on their own.

“There is no problem with offering lower per-MB rates on larger bundles, but that should not be the basis on which operators claim they are bringing down the cost of data,” Goldstuck said.

“If they are only doing it for those who can afford large bundles, then they are operating with an anti-poor attitude. By not making data affordable to those who can only buy it as they use it, they are keeping a large proportion of South Africans out of the Internet economy.”

Mobile data price split - prepaid vs contract

Competition Commission inquiry

The Competition Commission has made similar recommendations, stating that networks should reduce the price of bundles smaller than 1GB to an “objectively justifiable and socially defensible range of the 1GB price”.

In a provisional report on its inquiry into South Africa’s data service market, released in April, the Competition Commission said that the maximum spread between the smallest package and a 1GB bundle should be 25%.

Now read: Why the Competition Commission’s plan for cheaper data in South Africa is a bad idea

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One graph that shows why people say Vodacom and MTN are too expensive