EDITORIAL: Vodacom data U-turn highlights new risks
Social media users reacted quickly after company proposed on its website to charge customers for a bundle roll-over service
It took a matter of hours for Vodacom, SA’s biggest mobile phone operator, to reconsider its intention to charge customers for the privilege of rolling over expiring and
Rules set by the Independent Communications Authority of SA (Icasa), compelling mobile operators to notify consumers about data-bundle usage and allowing them to roll over unused data, come into effect on Friday. The practice of forcing customers to forfeit data that they had not used when time to renew their bundles came has always been controversial.
It seemed unfair that consumers should be disadvantaged and be deprived of something they had already paid for, simply because they had not used it all up by a particular time. So this became a lightning rod in the wider debate about the cost of data and whether this was holding us back in a world economy that is increasingly dominated by technological advances that rely on the availability of fast internet connections.
It did not take long for users of social media to notice that Vodacom had proposed on its website to charge customers for the “data bundle roll-over service”, sparking accusations that it was trying to circumvent the new regulations, to the detriment of its customers.
The practice of forcing customers to forfeit data that they had not used when time to renew their bundles came has always been controversial.
For example, keeping more than 1GB of data that was valid for more than one day would cost as much as R49. That hardly sounds fair considering that Vodacom charges R149 for a 1GB prepaid data bundle. In other words, you would pay the equivalent of a third of the price just to hold on to what you already owned.
A bigger indictment of the mobile operators in SA, based on information cited by MyBroadband, is that prices have remained virtually unchanged since 2015, when technological advances would normally be expected to push prices down.
As important as it is, that is a debate for another day.
The most interesting thing about the Vodacom saga is what it says about a new risk that companies have to navigate, and how so many have been found wanting.
Vodacom’s initial announcement that it was reviewing the fees did not come because Icasa or any other government body put pressure on it. Unfavourable commentary on Twitter was what did it, with much of it agreeing with Mergence Investment Managers portfolio manager Peter Takaendesa’s comment that the charges went “against the spirit” of the new regulations.
Vodacom is not the only company in the country, or world, to find itself on the wrong side of a Twitter storm.
It is not always the case that the companies’ actions are wrong in themselves, but the episode demonstrates how events can quickly run ahead of them. Take the case of Momentum late in 2018. The facts of the case seemed to be obvious for the company. A client signed up for life insurance and provided incomplete information. Therefore it was within its rights to refuse to pay out the subsequent death claim.
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But it did not count on the public outcry, driven by sympathy for the customer, a 42-year old father who was killed in a harrowing hijacking. Momentum tried to stand its ground for a while, but in the end decided it would rather pay R2.4m than subject itself to the constant public hostility. It did not matter that the ombudsman for long-term insurance found in its favour.
Engaging with shareholders, customers and even their own employees has always been an important part of running any business and protecting one’s brand.
Recent episodes indicate companies have not yet mastered how to do it in the fast-paced age of social media in which customers are able to inflict lasting damage in real time. It is something they need to come to grips with as it emerges as one of the biggest risks to their image, and ultimately bottom line.