London — Since 2012 46 countries across Africa have seen at least one 4G mobile network commercially launched. In the next 12 months that is expected to rise to 51 countries. Mobile operators have invested billion upon billions of dollars in licenses (research has shown that the average license cost is $214million) and network roll out. Digital transformation across the continent is happening. Author of a new report on 4G roll-out in Sub-Saharan Africa, Balancing Act's Head of Research Matthew Dawes looks at why things have not yet taken off.
Why hasn't there been the expected increase in connections and mobile data usage through 4G networks? If you remove Morocco, Tunisia, Egypt, Algeria and South Africa from the equation, the number of 4G connections across the continent is reduced from 30 million to a mere 7.5 million. Average MTN subscriber use is just 1MB per month of mobile data.
As usual, there are a multitude of reasons - the effect on battery life, the price and number of enabled handsets, the need for a new SIM card, consumer education (do they have mobile data and 4G switched on?), negative consumer experience (bill shock), lack of / quality of networks, reliance on free WiFi hotspots, lack of awareness and sometimes the feeling that 3G connectivity is effective enough. However, it can be argued that the responsibility for the failure of 4G adoption can be traced back to the companies that made such substantial investments - the mobile network operators.
Analysis of pricing for 500MB worth of pre-paid data across 52 4G mobile operators from 27 African countries sheds some light on a key barrier. The average price for such a package is $2.58, with the most expensive data coming in at $8.00 for 500MB and the cheapest costing $0.44. Within a country there can be vast differences in data pricing - taking Uganda for example, where one subscriber could pay $3.6 for 500MB from one operator and another is paying $1.32 for the same amount. Regionally, it is very much evident that consumers in the east of the continent are paying significantly less than in the South and West.
It is, also, important to take into consideration just how little 500MB of data will buy a consumer. It's the equivalent of 40 minutes on Facebook, just over 200 web pages or 45 minutes of watching YouTube. In short, 500MB for the digital citizen can be burned through at quite a rate and it's not the basis for a full digital life on the continent.
When data pricing across the African countries is compared to other countries, like Sri Lanka, another emerging economy, where 500MB comes in at an average of $0.29, then it's clear that data prices are simply too high. It becomes alarmingly clear when GDP per capita is brought into the equation as well. Relatively, consumers in South Africa and Kenya are paying 14 times more for their data than Sri Lankan consumers, or a staggering 61 times in the case of Uganda. There are numerous different ways of slicing and dicing figures such as these, but there's no doubt the adoption of 4G across the African continent is being held back by the price of data.
What else has researching 52 different African MNO data pricing shown? The incredible complexity of the packages available makes it confusing for the consumer. Either as a result of legacy pricing models or simply in an attempt to daze and confuse the consumer it truly is an absolute minefield of packages, benefits and factors.
Taking into consideration the consumer's entire journey in getting to the point where they are ready to use a 4G network, the final hurdle that they need to overcome is what data package to commit to. How much data, how many days, day time and night time usage, complimentary access to social media or app store or music downloading. The sheer number of decisions the consumer has to make is overwhelming.
In India, one operator took the decision to slash and simplify their data and handset pricing, which resulted in their competitors feeling the need to follow suit. You can imagine the panic in the finance and strategy departments, the effect on short term revenues may have been tough to take. The end result though was that everyone gained - 4G subscribers grew by 5 times, monthly mobile data usage more than doubled, 3G data usage almost tripled, video on demand usage soared and rose to account for 65-75% of bytes used. All this was achieved in just 15 months.
The end result of high data prices and complicated data packages can both be counted as key factors which are limiting the adoption of 4G across the African markets. The overarching consequence is that the progress of digital transformation across the continent is being hampered. For the digital citizen to become a bona fide user, they shouldn't be jumping from one WiFi hotspot to the next, they should be experiencing seamless connectivity, at price points where they shouldn't think twice about continuing their digital life.
4G connectivity offers so much to the consumer. For the wider content and services ecosystem it's such an upgrade in the quality of the user experience they can deliver. Unfortunately, digital transformation is being hampered by the very people that stand to gain the most, and not just financially, from it. African mobile operators have the opportunity to cement their status at the centre of the ecosystem, as the single most important element in a citizen's digital life. That is a massive opportunity, but it's an opportunity that they need to be seize and they're haven't done so yet.
4G & 5G in Africa: Launches, subscribers, data prices and trends report is set to be published on 26th March 2019 and is available for pre-order now. All pre-orders will receive a 30% discount, from the release price of £1400. The report examines in detail the expansion of 4G evolution across the continent. Included for the first time is detailed research and analysis focusing on data pricing in Africa.
Starting with an examination of the current status of play of mobile on the continent the report breaks down what is limiting the expansion and use of 4G and details the countries that currently do not offer 4G connectivity. The analysis of consumer data costs investigates 52 mobile network operators, spread across 27 countries, and examines the clear differences consumers face when purchasing a 500MB bundle of data, the impact of that pricing and comparisons, which includes the application of GDP per Capita, offering the reader a real view of the relative cost of data. The report finishes with MNO considerations and reflections, analysis of the network infrastructure providers and, finally, with a glimpse into the expected impact that 5G will make over the next decade.
Take advantage of the pre-publication price of GBP980. If you're interested in the report, email Matthew Dawes on firstname.lastname@example.org and we will email you the contents page and list of charts. Or if you would like to talk to him about the report, suggest a time using the same email.