Picture: ISTOCK
Picture: ISTOCK

Is it too soon for consumers to pat themselves on the back? Government initiated a second inquiry into mobile data last week, after a #DataMustFall campaign drew attention to the problems in the way consumers are charged by mobile operators.

The latest action — draft regulations published by the Independent Communications Authority of SA (Icasa) — could change the way operators apply expiry dates to data bundles. It comes after government’s recent decision to investigate data prices.

Data has become the new battleground for mobile operators and consumers. It is a huge growth area for service providers, accounting for between 25% and 35% of their revenue.

Over time, data may even overtake revenue from voice calls. The ability to make calls using services such as WhatsApp and Facebook will drive this. It has created the need for consumers to buy data bundles, which are a more cost-effective way to purchase data.

At the end of June Vodacom reported an 18.1% rise in date revenue, to R5.5bn. Active smart devices on its network increased by 18.4% to 16.6m, with the average monthly data used on these devices increasing to 734MB per device.

In the six months to June, MTN SA grew data revenue by 18.5%. Cell C has 12.5m active data subscribers and generates R4.4bn in data revenue.

Icasa’s proposed amendments to its end-user and subscriber service charter regulations provide suggested expiry dates for data bundles (see graphic). A 1GB bundle, it suggests, should have a 60-day validity period.

At the moment, the most common validity period for data is 30 days, though some operators offer longer periods on some packages.

But Icasa’s proposed changes fail to address the fundamental flaw in the structure of data pricing in SA, says World Wide Worx analyst Arthur Goldstuck.

He says that in their current form, the changes "would allow operators to continue punishing the poor for being poor".

Prepaid subscribers, who are largely low-to middle-income users, pay more for data as well as voice calls, against customers who have cellphone contracts.

Low-income data users tend to buy small bundles because that is all they can afford. By allowing the bundles to expire, Icasa "is in effect forcing the repurchase of bundles more regularly, putting a strain on tightened budgets".

Ultimately, he says the regulations will protect the wealthy, while failing to help the poor, with the consequence that the digital divide will widen.

The new regulations are expected to hit company revenue.

Africa Analysis MD Dobek Pater says subscribers pay network operators for the right to use a defined quantity of data over a specified period of time.

With expiry dates eliminated or extended, subscribers will essentially buy a better product, giving them the right to use a quantity of data over an undefined or unlimited period, says Pater.

But there is a risk that providers will introduce price increases to offset lower revenue.

There is another element: data that expires and is not recoverable. According to Pater, the level of "breakage" or expiry of purchased data varies between the prepaid and postpaid sectors. It is probably higher in the postpaid market.

In addition to longer validity periods for data bundles, Icasa has proposed that operators inform subscribers much earlier that their data is about to run out. This will give them adequate time to act, and prevent them from being charged out-of-bundle rates, which are notoriously high.

The proposed regulations require, among other things, that mobile network operators send "data depletion notifications [at] regular intervals [to] show 50%, 75%, 90% and 100% depletion of data bundles".

They are also required to automatically disconnect users from out-of-bundle data usage when they don’t respond to opt-in or opt-out notifications.

Icasa has invited the public and network operators to comment on the proposed regulations.

mochikot@businesslive.co.za

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