Why your airtime and data expires — and why this won’t change any time soon

Mobile phone customers should not expect an end to expiring airtime and data packages any time soon as the country’s cellphone providers continue to defend this status quo, arguing that a lifting of such usage restrictions is too costly. 

Though mobile data prices have decreased nearly 50% in the past five years due to regulatory and consumer pressure, South Africans still find this form of internet access expensive.

A major gripe compounding this issue for many consumers is the fact that mobile phone operators place a time limit on when airtime and data packages can be consumed. This is typically on a monthly, weekly or daily basis, depending on the package purchased.

The argument for proponents of the alternative is that airtime and data purchased should be allowed to be fully depleted.

In many instances, packages expire before a customer has been able to fully use up what they purchased, such as a 1GB bundle that terminates after a month with only half the data used. 

In a rare appearance last month in front of parliament’s portfolio committee on communication and digital technologies, CEOs of SA’s largest mobile providers were at pains to explain why it is not economical to have packages that do not expire. 

Various members of the committee, led by chair Khusela Diko, grilled the operators on what they see as an unfair business practice, particularly for vulnerable and poor consumers who make up a large part of the mobile customer base in the country.

The heads of MTN and Vodacom explained that their pricing frameworks are geared towards access to network services for a given time as opposed to unfettered admission, in perpetuity. 

“The network is a finite resource,” said Charles Molapisi, CEO of MTN SA. “So when we price for the network, as a principle, we need to price with resource allocation in mind. When we create demand on the network, how much of the demand can we sustain and support?”

“We say 7-day bundle, 3-day bundle, 1-hour bundle. We’re giving it to you because we look at the resource on our network and decide that for this volume of usage we can afford to allocate the following resources.”

Put differently, data pricing is “based on how we dimension the network... what we need to input into the network to carry the data,” said Sitholizwe Mdlalose, CEO of Vodacom SA. “Making something fully available all of the time is obviously more expensive than dimensioning it differently, at different times.” 

He said buying a data bundle “is not like buying a loaf of bread,” which a consumer owns outright. Rather, it’s about buying access, “like buying a Gautrain ticket. You can buy a train ticket for two days, for a week or a month. It’s about the access that it gives you to that service.”

Lunga Siyo, CEO of Telkom's mobile business, said pricing also takes the cost of borrowing into consideration. 

“For every [unit of] airtime that hasn’t been utilised by the customer... because you’ve sold a service and you haven’t delivered on that service... you actually have to put a contingent liability on your balance sheet. And as you carry this liability every year, it grows and might grow to a point where your liabilities are much higher than your assets, [becoming] technically insolvent.”

He said such a situation makes it difficult to raise money from banks to invest back into improving a carrier’s network. 

This is not to say no operator offers an alternative.

Capitec, through its mobile virtual network operator business that uses Cell C’s network, has brought the fight to traditional operators with its service in recent years. The bank is famous for being one of the only mobile providers to offer data packages that do not expire.

gavazam@busineslive.co.za