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Data bundles are limiting business potential of consumers

A participant using her phone during the Forum on Internet Freedom in Africa 2023 in Dar es Salaam

A participant using her phone during the Forum on Internet Freedom in Africa 2023 in Dar es Salaam

In today’s digital age, access to and use of the Internet has become an essential feature of our daily lives.

From email communication and instant messaging to entertainment and commercial transactions, the Internet has transformed how we connect to the world.

However, a significant hurdle of data bundle pricing remains an obstacle to millions of Ugandans seeking to harness the potential of the Internet. This problem disproportionately affects the poor and marginalized communities, limiting their ability to access information, economic opportunities, and other benefits of Internet usage.

In Uganda, for one to access the Internet, it is necessary to take out a data volume bundle subscription or an Internet service contract with an Internet access service provider (ISP), who will provide the subscriber (consumer) with internet network connectivity which may be wired or wireless.

Consumers need the Internet to run their day-to-day lives. For instance, sending or receiving electronic mail, searching for information stored on computers that are connected to the Internet, undertaking business-to-business, business-to-consumer transactions, et cetera.

The Internet thus provides an expeditious medium for accomplishing all these tasks. Indeed, in a competitive market, especially when the subscription costs are extremely low, consumers typically subscribe to multiple ISPs to widen their options for “a good deal.”

This is especially true for economies where Internet is predominantly offered by mobile network operators (MNO), as opposed to fixed network operators (FNO). To understand this data pricing challenge, by way of comparison, normal life utilities such as water and electricity all have standardized measurements.

However, the sale of data services has distinct features that make it a lot more complex than traditional utilities such as water, electricity, etc. Relative to traditional utilities, the Inernet is metered and sold by the volume of data traffic required by the consumer, or by the rate of data transmission (speed) afforded by the service provider.

Combinations of these two metrics are found as service packages on offer by internet service providers (ISPs) on the market. A minimum of three parties are involved in the transaction of Internet (Data Services) i.e. the supplier and at least two consumers. One consumer is the one who initiated the Internet session (the Originating Party-OP), and the other consumer is the Correspondent Party.

CP is necessary for communication to take place, never mind that CP may not be a human but a computer. Unlike the other utilities, the Originating Party (OP) and Correspondent Party (CP) are charged for the session by their respective ISP.

This is unlike telephone calling (voice) where the calling party is charged for the call (except when calling a toll-free number). Through interconnection agreements, the ISPs make internal arrangements on how they would benefit from the charges to each party.

Ideally, like other utilities, the consumer ought to pay a flat periodic rate that guarantees them when they can use the data service at a certain data rate/speed whenever they need it, during the agreed period. This is because, unlike a phone calls (voice), with data services (Internet) it is not easy for the originating party (OP) to assess the quality and terminate the connection to save on charges.

The OP is more likely to keep trying repeatedly while unknowingly being charged on all packet re-transmission attempts since data is consumed and time (s) has elapsed, among other reasons.

In developed markets, the Internet is typically sold by speed (with a data cap) and on a contract basis. Whereas in developing markets, the Internet is typically sold using a Pay As You Go (PSYG) business model and by volume (ostensibly) to capture the informal consumer that has no credit history; the real reasons are anywhere in between altruism and the profit motive.

In the aforementioned analogy of other utilities with standardized measurement, it does not appear to make logical sense if the consumer were to purchase an “expiring” gas cylinder.

Therefore, to ensure improved consumer satisfaction, standardized measurement, and better Internet usage, it is imperative and of great public service for the Internet service providers (MNOs) to come out and clarify on the transparency and integrity of their systems as used for the accounting, charging, and billing of data services (Internet).

Moreover, meaningful Internet (data services) consumption is a direct factor of affordable, transparent service provisioning, and reliable Internet access, which is an indicator of validated digital transformation - an element of Uganda’s third National Development Plan.

By addressing the data pricing challenge, we can unleash the true potential of the Internet as a catalyst for economic growth, education, health care, and social development.

It is high time that stakeholders came together to prioritize the issue, enabling Ugandan telecom consumers to enjoy the benefits of a connected and inclusive digital future.


The author works with Datafundi

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