Why SA can’t get movies online? SA lacks the will to transform itself into a digital beacon

In many parts of the world the Internet is the primary provider of information, news and entertainment. All the dramas, sitcoms and television series are among the daily offering. Netflix, a popular US-based, content service has millions of subscribers many outside the US. Sadly, Netflix won’t be avaibale in South Africa.

The reason? Access to the Internet is just too expensive and download speeds are far too slow. Therefore, Netflix does not see a viable market in the country. For years the government has been drafting and altering the policy documents on broadband but the price of Internet access continues to remain outside the affordability of most South Africans.

Video streaming is the holy grail of the Internet and for the majority it will probably stay that way.

The International Telecommunications Unions (“ITU”), an agency of the United Nations, continues to provide world leadership not only on technology but, importantly, on “fostering equitable access to the modern technologies that can transform people’s lives and help break the vicious cycle of poverty and isolation”. The ITU says its development goals prioritise equitable access, not just across countries, but within communities, with special focus on gender issues, youth access, the disabled, indigenous communities and very remote populations. There is also a special direct aid programme targeting the 49 UN-designated Least Developed Countries (LDCs).

UN Secretary-General Ban Ki-Moon says on the ITU site:Through e-learning, e-health, e-government, climate monitoring and more, today’s and tomorrow’s technologies will help bring the Millennium Development Goals (“MDGS”) within reach. The power of fixed and mobile broadband will further improve our ability to extend basic services to communities – even those in the remotest places – in ways that where inconceivable when the MDGs were first articulated more than a decade ago.”
According to the ITU the number of mobile cellular subscriptions worldwide is now well over five billion and more than two billion people world-wide have access to the Internet. In terms of ICT access it’s been a miraculous new millennium for most of the world’s poorest nations, and especially for the LDCs, with the total number of mobile cellular subscriptions in the LDCs as a whole rising more than 150-fold since the year 2000 – from under 2 million to 280 million by the end of 2010.

But the ITU is concerned about the many problems that still remain. The buoyant regional growth averages hide wide disparities, it says, and while some LDCs are booming – at end 2010, Gambia and Mauritania, for example, boasted mobile penetrations of 80% or over, far higher than the European average of 50% in the year 2000 – Eritrea still has an effective teledensity of less than 4%. In the Pacific, Samoa has a mobile penetration of 91%; Kiribati, its near neighbour, has 10%. And Myanmar, in contrast to many markets in Asia, has just 12 mobile subscriptions per 1,000 people.

This is in stark contrast with the industrialized world where Europe now has many more mobile subscriptions than inhabitants, and where, globally, 100 countries now boast mobile cellular penetration of over 100%. But phone service is just one part of the puzzle in a globalized economy that increasingly relies on online information exchange. At the turn of the millennium, the 49 LDCs shared just 178,000 Internet subscribers. While that number is rising, penetration remains low, at just 4.6% in 2010.

Turning to broadband, the ITU says, penetration in parts of the developing world remains largely confined to foreign-owned businesses and the tourism sector. In 32 of the world’s developing nations, the cost of a monthly broadband subscription is over 50% of per capita monthly gross national income – compared with under 5% of per capita GNI in the top 46 countries in the ITU’s ICT Price Basket.

According to the estimates (and there are several) the rate of Internet penetration in South Africa stands at about 48.90. Now look at South Korea: more than 90% of the people are connected to a low-cost high speed network.

South Africa is a wealthy country, although plagued by a legacy of structural economic problems. Its infrastruture, in broadcasting and telecommunications, is outstanding. In broadcasting more than 90% of the population have access to terrestrial television.

 

Unlike broadcasting the broadband infrastructure is expensive and its benefits are therefore limited, making the online video market unsustainable. As government commitment to an affordable broadband network does not appear to be a matter of priority, the country’s full participation in the digital world remains elusive. In South Korea, for example, progressive digital strategies as well as an incredible determination to roll out an affordable broadband network has made the country one of the world’s leaders in digital innovation and development.

South Africa ranks at least 5th in Africa and 92nd worldwide for individual Internet usage, according to a 2013 State of Broadband Report released by the UN Broadband Commission. There is no further information to date to indicate that South Africa has moved up a rank. In terms of Internet speed, South Africa ranks 6th amongst Africa’s Top Ten countries, with Ghana taking the lead followed by Zimbabwe, Kenya, Libya, Madagascar, South Africa, Morocco, Nigeria, Rwanda and then Mozambique. (IT News Africa, 2012.) By 2012 estimates – Zimbabwe was ahead of South Africa and that should worry us.

South Africa seems to lack that will to transform itself into a continental digital beacon. This is not a hard problem to solve. It needs a will and commitment to building an infrastructure, although some of the infrastructure is in place.

The first problem is access to the Internet in the cities and in the rural areas. The second problem is the cost of the access to high speed connectivity.

Government is expecting to pay billions of rands for set top boxes that will give South Africans access to the new digital television signals which we hope to get next year. Yet, the government does nothing to contribute to low-cost, high-speed access to the Internet.

The Department of Communications says that a telecoms policy review is underway and a White paper is expected some time in October this year. This White Paper is probably a good idea if only to add focus to the country’s embarrassing under-achievements in comparision with the smaller economies in Africa.

As the current broadband policy has achieved nothing of value for millions of people, we are left with the privately-owned operators whose only aim is to profit from Internet access and usage.

In the interim, Netflix is not ours to access, and may not be in the near future. Now that is a pity, as well as bad business metrics for the economy.

 

For abbreviated online version see 19 September 2014, Business Day Live, http://www.bdlive.co.za/blogs/finance/2014/09/19/blog