Digicel’s demise (not) and the data-only reality

by Matthew Cohen

COVID-19 has accelerated the use of digital throughout the world, the question is, is the Caribbean ready for the change and made the recent difficulties at Digicel a cause for concern?

Is the death of Digicel greatly exaggerated?

There’s been a lot of ink spilt recently on the death of Digital in the Caribbean. To paraphrase and to misquote simultaneously… the reports of Digicel’s demise are greatly exaggerated.

Here’s why.

To understand what is happening, it is essential to understand not only the history but the current context. If we look at it in detail, two aspects need to be taken into consideration; the offer and the usage. It is here we see the first signs of a strategy that is no longer in line or adapted to the current market and the emergence of a strategy targeted to the way we use mobile phones today.

The Context – Digital in the Caribbean

In the last several years, it is clear that three things have become increasingly important and more frequently used than at any other time in history; digital technologies, mobile and social media. With a global population of 7.7 billion, we now see more than 4.5 billion people use the internet. Social media boasts 3.8 billion users, essentially making around half of the planet using some form of social media. The COVID-19 pandemic has done nothing to stem that growth, if anything it has likely increased usage and signed up many more users that would have eventually got on board.

Interestingly, of all internet usage, mobile data usage will top 50% for the first time this year 2020, with the average time spent on the internet of 6 hours and 43 minutes. Basically a full workday is spent on the internet, either for business or pleasure, most likely a mixture of both. Of that time, users around the world spend on average 2 hours and 24 minutes on Social Media. Growing categories such as Ride-Hailing, Digital Marketing and Online Shopping are all being affected by the growth in access to data on-the-go.

I previously wrote a brief piece about digital in the Caribbean, so it is pertinent to revisit this with the latest statistics I could research. As with the original essay, all data is from wearesocial unless specified otherwise.

Starting with literacy, which is table stakes when it comes to using digital technologies like computers and mobile phones, sadly, the Caribbean still has much work to get the population above 90% literacy in the region. Looking at the general breakdown, women’s literacy rates are 88% with men’s only slightly above at 89%. To look at this the other way around, over a tenth of the population are unable to read and write by the age of 15. How are they going to buy food online or use other digital services?

Internet penetration (the number of internet-connected people compared to the total population) is again, sadly, lagging even our closest neighbours. With 60% penetration in the Caribbean compared to Brazil’s 72%, or Central America’s 66%, that translates to roughly 17 million people in the region still unconnected. But it’s not all bad news, as growth in internet-connected users is a healthy 8.5%. Meaning that 100% connectivity is still more than a decade away, but it’s moving the right direction. If the COVID-induced recession is not as damaging as feared, I suspect that growth will accelerate.

Devices are an important part of getting online and globally, only 3.3% of users have “feature phones” (yes they are still on sale in the region) that get internet connectivity, compared to 91% of smartphone users. The only reason to get a smartphone is to use the internet. This is corroborated by the fact that 53.3% of all web traffic is from mobile phones, an increase of 8.6% globally, at the expense of traffic from fixed devices like PCs and laptops, tablet devices and consoles, all reducing in usage; -6.8%, -27% and -30% respectively. Mobile connectivity as a percentage of the total population is currently 77% in the Caribbean. As a comparison, most of the “developed” nations run at over 100%. However, the distribution in our region is less than even. Antigua and Barbuda is third in the global table with mobile connectivity at 195%, just behind the USVI at 198%. The French West Indies (Guadeloupe, Guyane and Martinique) are at an average of 138%. All this drives an average of 7.2 GB of data per month, per mobile connection in the world, with Latin America and the Caribbean running at half of that, i.e. 3.6 GB.

Social media usage in the Caribbean runs at around 51% of the total population, an increase of 11% since 2019. Some of our islands make it to the top ten list, with Aruba and Cayman Islands coming in 6th and 7th with social media penetration rates of 90% and 89% respectively. Looking further into the data, eligible users are defined as children 13 years and older, which puts the Caribbean above Europe in the use of social media, 64% compared to 62%. Incidentally, Aruba tops the chart when it comes to Facebook eligible audience numbers, a full 96% of 13+-year-olds are available on Facebook. We’ve never been more connected.

What are we all doing online? Well, according to the data, 90% of users watch online video content, 70% are streaming music, and 47% and 41% listen to online radio stations and podcasts respectively. Mostly, entertainment services make up the bulk of internet usage, goodbye traditional TV and Radio seems to be the order of the day. Looking at the apps currently used, it is chat (mostly WhatsApp), social networks (Facebook), video apps (YouTube), shopping and (Google) maps, when looking at global usage. Unsurprisingly, social media makes up the lion’s share of that usage; in fact, a full 50% of the 3h40 minutes is attributed to social media. This usage is also corroborated by the top three most visited websites (globally); Google, YouTube and Facebook coming in third place. Interestingly, and something I’ve noticed for quite a while, the younger generation, Gen Z, are the least interested in Facebook, with only 3.1% of males and 2.5% of females on the site, only the over-65s have less presence!

The History – The offer in the Caribbean

If we ignore the smaller players that are primarily localised to a specific market like the Dominican Republic or the US Virgin Islands and Porto Rico, there are two leading operators, Digicel and Flow. Flow is the incumbent and has been in the region in one form or another since the early twentieth century, as this map of the Eastern Telegraph Companies network shows. Digicel is a newer entrant, but by no means unique to the region. Digicel launched in 2001 in Jamaica and has quickly spread across the region and into other overseas territories in the Pacific Islands region in 2006.

Source: Wikipedia

Both operators are well implanted and serve the wider Caribbean with mobile phone, data and other services such as broadband and television. Digicel has recently got into the mobile money transfer business with Digicel Mobile Money launched in Fiji in 2010 and is looking to expand around their markets.

Without taking on exhaustive research to compare offers, services and pricing (which is incidentally about as transparent as mud), it is difficult to get a detailed picture across the region. Complications such as currencies and fluctuations in exchange rates only further obfuscate value comparisons. Suffice to say though, that if you live on an island that has a small population you are likely to get less for your money! Broadband pricing ranges from an average of 25 USD per month for a broadband fixed-line connection in Saint Martin (French side) to an average 179 USD per month in the British Virgin Islands, that’s according to cable.co.uk, a firm dedicated to researching broadband pricing globally.

But that’s not the real issue, as far as I can tell, most offers are geared toward the old-reality of the internet. That is to say that once upon a time we were entertained by television and would communicate with friends and family using a phone. The current offers are squarely aimed at that, with classic triple-play deals; TV, telephone and (limited) internet. Note that the internet is last on the list!

The Future – The way we’ll all be using the internet

Source: Apple

Habits on the fundamental way we’re consuming entertainment are changing concurrently with the way we are communicating. As more and more streaming opportunities coming online, people have got used to watching what they like, when they want, not when a TV station dictates. There’s no surprise of the rise of Netflix and the up and coming services like HBO Go, Disney+ and Apple’s own attempt, Apple TV+. In this reality, content is king, and the internet providers are reduced to simple data pipes, shipping IP bits backwards and forwards at the demand of both the customer and the content creator/owner or platform. Their bread and butter is being commoditised and the value being sucked out. A reality that they are undoubtedly very uncomfortable with, which is why the triple-play is still so prevalent as it ties the user into one service where profits and losses can be spread. When evaluating the worth of one supplier over the other, I’m sure you’re no longer interested in call quality over a landline, you Skype, you FaceTime or WhatsApp with better voice quality than many operators can supply using POTS.

However, what the new generation wants is entertainment, social networking and ephemeral communications. In other words, what they want is data. Data is the backbone that supplies them with YouTube, TikTok, Instagram and all the other services that are so far outside the purview of traditional media, and it is mobile! Looking at mobile data costs, the French West Indies comes out on top with average GB pricing lower than the rest of the Caribbean with prices at around $2.5 US, compared to $23 US for the Cayman Islands. More and more is being done on mobile, whether it is in the home or on the go. The mobile phone or tablet device is the item on which people are being entertained, checking the bank balance, buying stuff and communicating. Fixed broadband is being deprecated by people’s real-world use.

But here’s the point, unlike the other operators, Digicel’s Wizzee brand in the French West Indies has done something different, and it is that something that is probably going to be part of the future of mobile operators. Currently, mobile subscriptions in the Caribbean are either data limited or so expensive as to radically limit the amount of data used (see above). With the world moving to more data-only services, music, television, video conferencing/chats (thanks COVID), and even plain old voice calling replaced with FaceTime voice or WhatsApp calls, networks are going to have to rethink their inadequate data allowances to evolve and allow their traditional cash cows to starve. As the state of digital in the Caribbean above shows, how services are being consumed is fundamentally shifting. Bits are taking over, and the younger generation are only going to get hungrier for more bits and more mobility, eschewing satellite, cable and other essential services.

Digicel’s Wizzee is the first attempt, and a pretty good one at that, of moving to a data-only world. 50 GB per month for €10 clearly emphasises data. When you look at the offer, you pretty much don’t care how many minutes or SMSs you get (does anyone still use them?). Wizzee is essentially a data offer with voice and SMS thrown in for free. As GenZ gets older, and a newer even more data-hungry generation comes along, the pressure to provide data-only services is going to grow, not diminish.

COVID-19 has given us all a glimpse into the future of data communications, and some would say communications period, and it is that world that operators need to start to pivot their offers towards. For what it’s worth, I think that the Digicel brand in the French West Indies will disappear with Wizzee disrupting its parent. It will continue steadfast in the rest of the Caribbean but will need to pivot to primarily data-first services to survive.