Data does not go sour, so the big providers must freshen up
• Pricing strategies for bundles in SA mean poorer consumers are hardest hit and marginalised
I’m going to start this column with a disclaimer. I am a Vodacom subscriber (from my prepaid days to today’s contract).
There are several reasons, some more valid than others.
First, back in the days before number porting, I really — no, really — liked my phone number and its symmetry. It’s evidently the silliest reason to stick with a provider, because no-one bothers to remember phone numbers these days.
Then I stayed because Vodacom seemed to have the best national coverage. My job has me travelling all over the country and my family are dorpdwellers, so strong signal and a large footprint made life easier. Later I became a contract customer, surfing the upgrade wave every second year.
Finally, there’s the inertia factor. Let’s call it adulting apathy. Changing providers is a schlep. Then again, other people seem to make the leap often from cheaper provider to better deal, so I concede it is a reflection of privilege to keep paying the same group because I can’t be bothered to swap.
All of which is a long way of saying I’m about to pick on SA’s biggest cellular provider, despite being a loyal customer. I actually feel it gives me more scope to quibble, but be sure to tell me if you think I’m conflicted.
Last week, the start of the month, I noticed my 20GB “signing bonus” (my words, not theirs) for my latest upgrade had vanished (expired). Did I miss something in the Ts&Cs? Undoubtedly. There’s no way Vodacom would not have given themselves the contracting leeway to accommodate that.
Did I forget to clarify with the sales agent? Probably. But I was still bleak.
I tweeted them, and we had an annoying little “did you read the Ts&Cs?” and “that’s not my point” back-and-forth.
This coincided nicely with the latest episode in the Competition Commission vs MTN and Vodacom saga, concerning the other #DataMustFall contention: the findings of the data services market inquiry, that South Africans pay more for data than our African counterparts — from the same providers — and that the prices constitute a “a bias against the poor”.
The commission gave these giants of telecom (which hold altogether about 70% of the market) two months to bring prices down, a declaration that shook the markets.
As Business Day reported, MTN and Vodacom lost R22bn of their combined market value on December 2.
Vodacom’s response to the ruling cites a “significant difference in opinion between the Competition Commission and Icasa [Independent Communications Authority of SA] on a number of issues critical to data prices”. Icasa seems to think our data costs are par for the course for comparable African countries. The commission, however, says we perform poorly relative to other countries, “with prices generally on the more expensive end”.
These players are also divided on the issue of spectrum in data pricing. Icasa says spectrum assignment is “critical to achieving cheap, high-quality mobile broadband”. The commission, not so much.
Icasa, the industry regulator, has said it will start auctioning spectrum for 5G and 4G bands towards the second half of 2020. A discussion document from the National Treasury in mid-2019 suggested this will contribute to reductions of up to 25%.
Vodacom says it has “reduced effective price of data by circa 50% since March 2016”. It says it is still reviewing the findings and will continue to respond accordingly. MTN promises to oppose the recommendations vigorously.
To be fair to these firms, they have a profit imperative and are operating in SA where — let’s be honest — conditions haven’t been super-conducive to doing business lately. They’re trying to keep the lights on literally. But they are also growing nicely. For example, MTN Group’s profit after tax in financial 2018 was up 110% from 2017 (from R4.55bn to R9.478bn).
So how expensive is our data? According to the Alliance for Affordable Internet, the price of mobile broadband data expressed as a percentage of gross national income per capita in Q2 2019 was 2.17% for SA. Kenya was sitting at 3.1% and Nigeria at 1.7%. Off the continent, our Brics counterparts had it easier: Brazil at 1.29%, India at 0.45%. So there is an argument to be made that we’re bang average for Africa, or that we’re overcharged in the grander scheme. When you factor in pricing strategies (though bigger data bundles cost less) and the depth of inequality in SA, you can’t get away from the fact that data bundles and expiring data are hitting the poorer SA consumer much harder than the 1%.
All of which takes me back to the plaintive plea of my tweet: the Ts&Cs are not the point. Data is not milk. It doesn’t go off. And we’d really like it priced as the essential it is becoming. It is the bread and butter of future business in an increasingly digital world. A gesture of goodwill would go a long way.