Vodacom said that if ICASA forces networks to implement a minimum prepaid data expiry of three years, it will make more money.
This follows ICASA’s publication of draft End-User and Subscriber Service Charter regulations which deal with data depletion notifications and expiry.
Vodacom said that of the proposed regulations, its biggest concern was the three-year validity period for data bundles.
Vodacom CEO Shameel Joosub made the statement at public hearings on the regulations.
He said that since Vodacom introduced hourly, daily, and weekly data bundles, they have become incredibly popular with subscribers.
They have also allowed Vodacom to drive down the effective price per MB of data.
The table below shows how the price of 1GB of mobile data on Vodacom changes as the validity period shortens.
|Vodacom 1GB Prepaid Bundles|
|Validity Period||Price||In-Bundle Rate|
Making more money
Joosub said Vodacom is able to charge less for 1GB of data that expires quicker thanks to “breakage”.
Breakage is where companies consider consumer behaviour in their pricing.
If subscribers buy 1GB bundles but don’t use their whole allotment, Vodacom is able to bring prices down.
To build its hourly, daily, and weekly bundles, Vodacom looks at customer usage and then designs a package.
“You’re discounting it, but you’re also pricing in the fact that many people don’t use the full bundle,” said Joosub.
This is why they talk about the “effective rate” per MB on the network, he said. Vodacom looks at the revenue of all bundles sold and divides it by the amount of data consumed.
Joosub added that if ICASA promulgates the draft regulations, all data bundles with shorter expiry dates will disappear.
“It will create a lot of consumer outcry if we do away with shorter validity bundles,” said Joosub.
This is because their current bundles will have to be replaced with more expensive packages which last longer.
Joosub suggested the regulations may work in their favour, as they will impose severe limits on innovation in the data bundle space.
Vodacom will support OOB price cuts
On the subject of out-of-bundle (OOB) data prices, Joosub said they would support a regulation process – but would prefer to be allowed to reduce prices on their own terms.
Joosub told ICASA they are committed to reducing data prices, including out-of-bundle rates, and are prepared to make a commitment to the regulator to reduce OOB prices at fixed intervals.
Referred to as a “glide path”, Joosub said they would support a process where the regulator requires all mobile networks to reduce their OOB tariffs.
“We are already undertaking to decrease rates, but if the regulator feels it wants to institute a glide path, we would be in favour of it,” said Joosub.