Vodacom CEO Shameel Joosub has explained that mobile data expiry and high out-of-bundle rates are legacy issues which need to be addressed.
Speaking to eNCA’s Taking Stock, Joosub said the cellular industry in South Africa evolved to create lower in-bundle rates and higher out-of-bundle rates.
He said that it is possible to sell bundled data at a reduced price because of breakage, where a user does not use all their data in the allotted time period.
“For example, if you use the Gautrain and you buy the 7-day package, you get a discount,” he said.
“This discount is possible because the Gautrain already calculated that, on average, consumers only use it for five days per week.”
Data bundles in the mobile industry work the same, where breakage on hourly, daily, weekly, and monthly data bundles allows for big discounts on the effective price of data.
Vodacom changing their pricing models
Joosub said consumer behaviour and demands have changed in recent years, and they are now adapting their products to accommodate these demands.
He said they are building a new system where customers will be warned when their in-bundle data is set to expire, and they will be given three options:
- Buy a new data bundle.
- Continue to use the Internet with higher out-of-bundle rates.
- Stop using the service.
This model will empower consumers to make a choice which suits them, he said.
What is needed to bring down prices faster
Joosub also stated that additional spectrum is sorely needed to accelerate the decline of data prices in South Africa.
He explained that they are not using their R9 billion annual network investment optimally to deliver data at a lower rate.
This is because the government is not providing the industry with additional spectrum, which forces them to re-farm 2G and 3G spectrum for their 4G network rollout.
If the government provides operators with more spectrum, it will allow them to significantly reduce the cost to deliver data, which in turn will result in lower prices to consumers.