Mobile use in South Africa
According to a 2022 World Bank report, South Africa is the most economically unequal country worldwide, with just 10% of the country’s residents owning 80% of its wealth. Due to this imbalance, there is a growing division in the purchase of consumer goods that is 40% higher than upper-middle-income countries; creating a digital divide felt intensely across the region.
This lack of consumption amongst low-income families and individuals is apparent when looking at the purchasing patterns of those with cell phones.
There are 90 million mobile connections in South Africa, yet, according to Statista, only 22 million people own a smartphone. A substantial portion of the population continues to use basic 2G feature phones over the more advanced alternative.
The feature phones lack the operating systems, downloadable applications, and connectivity delivered by smartphones. This results in the majority of the population missing out on a plethora of digital services that could help improve their quality of life.
Despite the slow uptake of advancing technologies and 4G and 5G connectivity, analysis from the International Data Corporation shows that the country’s smartphone market grew by 16.8% during the first quarter of 2021. This is a move in the right direction given that the Independent Communications Authority of South Africa (ICASA) has declared that 2G and 3G networks will be turned off by 2025.
How will South African consumers benefit from the migration to 4G and 5G and, more importantly, how can mobile operators accommodate this shift for lower income communities?
Benefits of Migration from 2G – 4G
As it currently stands, the digital economy contributes 15.5% to the world’s GDP, which will continue to grow with wider technological advancements. As such, participation is vital for countries everywhere to strengthen their domestic wealth.
South African leaders understand that full deployment of 4G and 5G is required to ensure the healthy growth of its digital economy and communications infrastructure.
Digitisation is underway.
South Africa switched from analogue to a digital-only television service in March 2022, which has freed up more spectrum bands for use by telecommunications companies. Furthermore, many operators have already begun to phase out 2G services, and many intend to remove 3G by the end of 2022.
In driving the migration of 4G and 5G, operators can deliver more wide-spread coverage with better efficiency and connectivity. This means they can offer stronger and more extensive coverage to those with smartphones.
Citizens across South Africa are warming to the benefits of smartphones enabled by 4G and 5G technology, and this uptake stands to be transformative for the country. With the increased use of smartphones, wider opportunities will become available, which could have a significant societal impact. The potential benefits are clear – access to digital health services, career, and economic opportunities, while boosting the country’s overall wealth.
This supported by The World Bank, which estimates that developing countries adopting these networks can expect to see at least a 1% growth in GDP.
Additionally, these changes stand to transform the lives of women across the country. While gender disparity is on the decline, a discrepancy remains between men and women. These differences are echoed when looking at statistics on smartphone usage. For example, 37% more men currently have mobile internet access than women in Sub-Saharan Africa.
A recent study supports this, revealing women who have access to mobile internet via smartphones have a 9% higher level of wellbeing compared to those who have a basic phone.
Challenges of 2G -4G Migration
The South African Government are rapidly preparing for an increase in better services. Just this year, ICASA completed a spectrum auction for the provision of 5G services, during which six bidders secured frequencies at an investment of USD $960 million.
However, while these plans accelerate, there is still the worry that those experiencing financial hardship may be left behind as the Government embarks on its ambitious drive.
For example, The Alliance for Affordable Internet estimates that a smartphone priced at USD $62 could cost 63% of a person’s average monthly income, being an unrealistic outgoing for many South Africans. Affordability is a fundamental problem and affordable network access is something that citizens have campaigned long and hard for.
Following the discovery that South Africa has the second most expensive data costs among Brazil, Russia, India, China, and South Africa (BRICS), a 2016 campaign named #DataMustFall was developed.
The plea gained traction and prompted the Competition Commission Data Market Inquiry, leading to a report which gave recommendations on how to combat the issue of expensive data charges. However, despite a reduction in cost, major operators cited that a delay in spectrum allocation meant they couldn’t reduce fees as significantly as they would like.
Noting the growing challenges around the digital divide, Trustonic has developed a mobile risk management solution that improves the affordability of 4G and 5G enabled smartphones, while reducing delinquency risk and enabling mobile operators to say ‘yes’ to more customers.
How Trustonic Helps
Trustonic’s device financing solution enables wider smartphone affordability, while shielding operators from the financial burden of late or missed payments.
Using the science of ‘Nudge’, the Trustonic device locking SaaS platform encourages customers to adopt better monetary habits by reminding them to pay outstanding bills on time.
This approach sees around a 70% improvement rate across bill payments within other markets and offers flexibility in the way operators can communicate with their customers depending on their needs. Additionally, a phone can be remotely locked should a user not be able to pay what is owed.
Device expense is one of the primary reasons the majority of the South African population cannot upgrade to a 4G or 5G enabled smartphone. This could potentially derail the efforts of operators who stand to gain financially from the migration to 4G and 5G, while leaving millions without any form of connectivity. Either way, the revenue for mobile operators will be impacted as a result.
The Trustonic telecoms platform offers a simple way to speed up the adoption of these stronger and more lucrative networks in South Africa, while enabling operators to limit risk and increase revenue.
To find out more, contact us today.
