How much data South Africans who live in shacks use if you give them uncapped Internet

Among the poorest households in South Africa use up to 3GB or 4GB of data per day if you give them uncapped Internet for free.

That was one of the notable remarks from Vumatel CEO Dietlof Mare during a recent presentation by Remgro to its investors.

Remgro is a shareholder in Community Investment Ventures Holdings (CIVH), which owns Vumatel and DFA.

Mare announced that Vumatel would launch fire-to-the-home services aimed at 9.7 million households in South Africa’s lowest income bracket with its new Vuma Key product.

The company has already launched Vuma Reach, aimed at households with incomes between R5,000 and R30,000 per month.

Vuma Reach is a prepaid service with cheaper uncapped fibre packages thanVumatel’s Core offering.

ISPs that resell Reach packages offer 20Mbps download speeds for between R375 and R400 on a 28-day prepaid basis.

With Key, Vumatel aims to cater to those who earn less than R5,000 per month.

The company first said it planned to offer uncapped fibre for R89 to roughly 10 million customers in 2017.

Although the project suffered some delays, it now appears to be on track for a commercial launch in the future.

The fibre network operator has launched a pilot in the Alexandra township to trial the product.

Alexandra township with Sandton in the background

Mare said some households were using around 3 or 4GB per day. That works out to between 90GB and 120GB per month.

He said there was a big opportunity to offer reliable Internet to this market and bridge the digital divide.

While the project is still in a pilot phase, Vumatel said it plans to start expanding it soon.

Mare said one of the ways Vumatel can offer such a low-cost uncapped service is to contend it a “little bit”. Contention refers to customers sharing bandwidth on a link.

Another factor that made the lower-income market attractive was greater uptake and retention.

Mare said Vumatel saw upwards of 30% uptake in Vuma Reach areas, better than the rates in its Core areas.

Despite the product not tying people into a contract, Vumatel retained customers because they viewed the service as a “utility” similar to having running water, Mare said.

Dietlof Mare
Vumatel CEO Dietlof Mare

Access to the Internet is seen as an essential economic enabler, helping to educate and inform people and provide them with job opportunities.

South African households with an income of less than R5,000 most often live in areas that don’t have reliable fixed broadband.

Instead, they must use mobile data, which can be very expensive compared to fibre.

Their low and irregular income also makes them less likely to be approved for a long-term or month-to-month cellular contract that provides data at lower rates than prepaid.

MyBroadband compared how much mobile data people could get for the same R89 Vuma Key is targeting using prepaid monthly data bundles from South Africa’s four major mobile network operators.

We also compared how much it would cost to buy the 90GB of data that some Vuma Key pilot phase customers were consuming per month.

Rain was excluded from the comparison because it offers no prepaid bundles.

Mobile data costs vs Vuma Key
Amount of prepaid monthly data customers get for R89 Cost of monthly prepaid bundles with at least 90GB data
Vodacom 1GB:
1 x 1GB bundle for R85
3 x 30GB bundles for R699 each
1 x 1GB bundle for R85
1 x 50GB bundle for R799 each
1 x 30GB bundle for R699 each
1 x 10GB bundle for R469 each
Telkom 1.035GB:
1 x 1GB bundle for R79
18 x 5GB bundles for R299
Cell C 2GB:
1 x 2GB bundle for R85
2 x 40GB bundles for R489 each
1 x 10GB bundle for R469 each

Now read: Vuma Core, Vuma Reach, and Vuma Key — Vumatel’s three services explained

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