Vodacom and MTN criticise proposed data bundle rules
Network operators have identified multiple issues with the Independent Communications Authority of South Africa’s (Icasa) proposed new rules governing data, voice, and SMS bundles.
They have argued that Icasa’s proposed intervention could have anti-competitive side effects and that some of the amendments were outside the regulator’s powers.
This follows the announcement that multiple industry players will participate in a public hearing at the beginning of October on Icasa’s proposed End-User Subscriber Service Charter (EUSSC) amendments.
These new rules, many of which focus on users losing data due to expiry rules, include depleting bundles in order of earliest expiry, bundle rollovers, and transferring bundles from one customer to another.
However, mobile operators in South Africa seem particularly concerned with the latter two rules, with Vodacom claiming that Icasa did not conduct an impact assessment prior to formulating the amendments.
If Icasa had, Vodacom says, the regulator would not have proposed them.
One regulation mobile networks are particularly up in arms about is the rollover of unused bundles.
While the current regulations state that mobile operators must allow customers to roll over unused data, Icasa has proposed amendments that mobile operators warn could have unintended consequences.
Icasa has proposed that customers should be able to roll over any unused medium and long-term data, voice, or SMS bundles without requiring action or incurring any cost on the customer’s part.
The revised amendments don’t stipulate specific rules for rolling over unused data from short-term bundles, which offer the most affordable rates.
MTN’s submission also includes suggestions for how Icasa should clarify the definitions of short-, medium-, and long-term bundles.
Effectively, short-term bundles would be anything that expires in a week or less.
Cell C argued that an adverse economic and financial impact may arise due to the network operator’s roaming agreements with Vodacom and MTN. This argument is specific to the operator, given its current business model.
Because Cell C has commercial agreements with MTN and Vodacom for its radio access network, users consuming data, voice, and SMS services outside of an estimated monthly usage may violate these agreements.
If consumers use more than the estimated monthly capacity needed, Cell C may be required to pay penalties to MTN and Vodacom.
Cell C also said that competition will decrease within the market due to the contractual nature in which rollovers will need to take place, reducing potential product offerings available to customers and, thus, innovation around these products.
Rain echoed Cell C’s sentiments, saying the regulations would hinder competitors’ ability to create more consumer-centric offerings, especially given its newly launched mobile offering, which has yet to establish itself within the market.
MTN, too, does not agree with the amendment in the name of competition, highlighting that it involves a regulator fixing trading terms, something not prohibited by the Competition Act but equivalent to market collusion between competitors.
It thus says the regulation should be deleted.
Vodacom, on the other hand, outright rejected that Icasa has the ability to compel mobile networks to do this.
It argued that allowing users to extend the validity period of the bundle — a product defined by its validity period and priced accordingly — changes the very nature of the bundle.
The proposal that customers should be able to transfer bundles between one another on the same network is also highly contested by mobile operators.
Cell C argued that this could result in competitive arbitrage, where customers can sell bundles to one another and potentially charge a higher or lower price than the network operator, creating a secondary market.
Icasa acknowledged that this problem could arise. However, it said this was only likely to occur if there was a significant difference in the unit price of bundle services between larger and smaller denomination bundles.
Although MTN already allows for data transfer, it believes the regulator’s intervention to mandate and regulate reduces the network operator’s ability to differentiate these products and gain a competitive edge.
Like MTN, Vodacom also allows data transfer between customers on its network and said that mandating and regulating this would undermine the operators’ ability to differentiate their service offerings.
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