• Digital divide

Digital divide

This survey looks at household and individual usage of ICTs in South Africa, and considers the likely effect of proposed policy and regulatory changes on this situation.

The report finds that:

• protectionist policies emerging from the privatisation of Telkom have not served the country well and while they allowed for the maximisation of state assets this occurred at the expense of the ICT sector and indeed the national economy. The household survey showed relatively low household penetration rates for communication services in South Africa, with access to fixed lines at 22%. Significantly, of the 32% of the population with mobile phones, 14% also have access to a fixed phone, suggesting that while mobile telephony offers convenience and additional utility it has only extended access to a further 18% of the population. While this is significant more than 68% of the population continue not to own phones. In this regard South Africa compares poorly with other lower middle income countries.
• South Africans value communications services and are willing to pay an extraordinarily high price for them: 8% of household income compared to international averages of around 3%. However pricing clearly remains an inhibiting factor both with regard to ownership and usage.
• usage of mobile services has increased exponentially. Despite the high cost of premium-rated, pre-paid airtime services, mobile usage rates have increased exponentially. The convenience and flexibility of pre-paid mobile services (lack of credit checks, and a pay-as-you-go system) have clearly spurred the adoption on a massive scale.
• however the number of fixed lines continue to be an important developmental measure, as there is a danger that a new digital divide will develop, between those with access to data services and those without.
• the continued high level of usage of public access phones, even among those with access to mobile phones, was perhaps one of the most interesting findings of the study and indicates the highly levels of dependence on access mechanism that aggregate demand and generally offer lower prices. Where these calling opportunities are most available ( in densely populated metropolitan areas) around 70% of respondents in metropolitan areas still used public access phones, and together with areas of lower access, nearly a quarter of the population continues to utilise these.
• telecentre were used by less than a fifth of respondents, while private telephone kiosks are used by nearly half of respondents. The greatest place of access to both basic and advanced services is the respondents’ place of work or school which is also indicative of the bias towards business over residential lines in the country.
• household Internet penetration is remarkably low at 3.5% of the respondents, with most Internet users acquiring access at work or school. With the low levels of household PC ownership (12%) and with the high cost of the fixed line infrastructure there is the danger that Internet will rapidly reach saturation. While Internet is used only under these circumstances it is not likely to drive uptake of residential broadband services and until there is widespread connectivity at the household level with access to enhanced services, citizens will not be able to participate optimally in the economy or society.

The report also looks at the policy implications of these findings, and the introduction of government licensing frameworks due in 2005 aimed at opening the sector to greater competition. The report warns that:

• once the liberalisation of self-provisioning and resale of bandwidth is enabled on both the demand and supply side, greater choice and cheaper prices for VANS and ISP services should result, but this likely to be primarily in urban areas since rural areas are perceived to be uneconomic, especially in the light of the diminishing business case for USALs.
• getting backbone and services out to under-serviced areas remains a major challenge for Government as the low access to both private and collective communication service areas in rural areas indicates. The privatisation strategy to double the network clearly failed with two million disconnections during the last three years of the exclusivity. The USAL strategy to encourage market entry into under-serviced areas has now been overtaken by events and failure to provide a supportive regulatory environment making entry into this market increasingly less attractive and at best very marginal.
• the proposed 50% discount on Internet connectivity for all public educational institutions will require skillful management if it is not to become counterproductive. It has the potential to interfere in the market mechanism which establishes prices, and can in turn lead to distortions in the market.

However, these developments, together with the proposed convergence legislation, have the potential to create an environment more conducive to investment and effective competitive. Together with proposed changes to the licensing and regulatory regime this should allow market forces to drive down prices with positive effects on the price of communication services and indeed the cost of business in South Africa. [adapted from author]

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