Watch out Vodacom and MTN – You’re going to get burned

South Africa’s mobile networks, and Vodacom and MTN in particular, could be among the most disliked companies in the country at the moment.

Cellphone services have become an essential utility around the world, and in South Africa they are a grudge purchase. We hate how much we pay for it, and hate that we have no choice.

It’s not like we have no choices at all – you can go to Cell C, Telkom, Rain, and a host of service providers that operate as virtual networks like Afrihost and FNB Connect.

But cheaper is not good enough. We want all the trappings cellular subscribers get in mature markets, with prices that reflect our status as an emerging market.

We want the cheap data bundles below 1GB to accommodate people who can only spend a few rand per week on connectivity, but we also want the affordable near-unlimited usage plans that people in North America and Europe get.

Over the last few weeks at MyBroadband, we have pointed out the numerous inaccuracies in the Competition Commission’s provisional data inquiry report.

People don’t want to hear that the Competition Commission’s data is inaccurate and has led it to fallacious conclusions. No-one wants to hear that the Commission’s proposed solutions to reduce prices for South Africa’s poorest will likely backfire.

Instead, people want to believe the Competition Commission has confirmed what they all feel – that the South African consumer is being milked dry by gluttonous mobile operators.

Ignoring pleas for relief

The reason for this is pretty simple. Vodacom and MTN make it easy to hate them.

For example, South Africans made it clear that we hated having our airtime eaten up by out-of-bundle data tariffs. Those on contract hated receiving a massive bill if they didn’t notice their data bundle had depleted.

Mobile subscribers have been unhappy about out-of-bundle billing (OOB) for years, but the mobile operators did not respond. As recently as 2016, several of Vodacom’s lower-end products still had OOB data prices of R2 per MB.

Significant reductions in OOB prices from Vodacom, MTN, and Cell C only really began after ICASA threatened to regulate the way data billing works in South Africa.

The reasons operators were dragging their feet is simple – they were making piles of money from OOB. Now it is coming back to bite them, right when they need it the least.

There is also still the issue of data expiry and the disparity in the per-MB prices for contract and prepaid data bundles, and between larger and smaller bundles.

Sometimes there are good reasons for these business rules in cellular products, but all of these issues fuel the resentment for companies like Vodacom and MTN.

It’s what caused the #DataMustFall movement and turned the mobile networks into the convenient punching bags they are today.

They can complain about the misinformation being perpetuated by the Competition Commission and #DataMustFall all they like – this is a bed of their own making.

Making a mockery of ICASA’s OOB rules

When ICASA introduced the first draft of its new End-User and Subscriber Service Charter (EUSSC) regulations, its intentions were clear – data expiry and OOB need to go.

The amended regulations got locked up in a ridiculous court battle, but when it was finally resolved the mobile operators were quick to toot their own horns as they complied with the new rules.

Everyone who didn’t already have data transfer, data rollover, and OOB blocking functionality were launching the features with their own fanfare.

Vodacom was first to show it had no intention of respecting the spirit of the regulations when it said it would charge for rolling over data on its network.

You would also only be able to roll over unused data for a maximum of 7 days into the new month. This means that if you wanted to roll over 1GB or more of data you would have to pay R49 to do so and would only get a week to use it all.

ICASA responded by investigating Vodacom’s proposed data rollover “solution”, and Vodacom quickly backtracked on its plan to charge for the service. In the same media statement, Vodacom also announced it would be implementing below-inflation price hikes on some packages.

Vodacom later announced that it would charge its customers to transfer data, with only transfers below 50MB being free. It would have made it the only operator charging subscribers for the service.

However, when Vodacom launched its data transfer service on 1 March, it offered the service for free, subject to certain terms and conditions.

Somehow, ICASA was persuaded to include wording in the final regulations that allows mobile networks to bill you out of bundle, so long as their out-of-bundle tariff is equal to their in-bundle rates.

Cell C made use of this to avoid making OOB blocking the default option on its network, though you can opt out of OOB using Cell C’s Spend Control service.

MTN has now decided to make a change that effectively brings OOB back through an “auto-renewing” 1MB data bundle that it bills at R0.40 per unit.

Data Refill — The new OOB

MTN’s auto-renewing data bundle is similar to a product Vodacom launched called “Data Refill”.

In essence, it exploits a loophole in ICASA’s regulations which state that the mobile network must ask you whether you want to buy a new data bundle or go OOB when your data runs out.

The regulations don’t stipulate which data bundles the operators should serve to customers, so Vodacom decided to create a new data bundle specifically for the purpose of this notification.

When your data runs out, rather than asking whether you want to buy a normal bundle, Vodacom prompts you to buy Data Refill.

When you buy Data Refill, you give Vodacom permission to top up your account with 10MB for R3 whenever your data is depleted. On prepaid this data lasts 3 days, while on contract the refills are valid for 30 days.

The big difference between MTN’s auto-renewing 1MB data bundle and Data Refill (aside from the per-MB price), is that MTN is tacking it onto every subscriber’s account by default.

It will launch for MTN prepaid clients from 16 May, and for contract customers from 7 June.

MTN has not revealed how long the 1MB will be valid for, which is somewhat concerning since you will be billed R0.40 whenever the bundle is depleted or expires.

Even assuming that the 1MB has a reasonable validity, and MTN won’t be charging you 40c every hour whether you use data or not, this auto-renewing bundle is an obfuscated form of OOB.

It is possible to disable it, but the operators are thumbing their noses at ICASA and the South African public. One way or another, it’s going to come back to bite them.

Just stop it

Vodacom and MTN need to start rebuilding public trust or they are going to get burned.

Without the trust of the South African public and policy-makers, network operators are going to find it difficult to persuade anyone to give them the resources they need.

When I speak to people within the Department of Communications on the sidelines of events like AfricaCom, it is clear that they doubt everything Vodacom and MTN have to say about spectrum and the price of data.

Scepticism is healthy, but because all trust has been eroded, what is happening is that anything Vodacom and MTN have to say is starting to be dismissed out of hand.

Self-regulate, or be regulated

By continuing to act unscrupulously, Vodacom and MTN are acting against their own self-interest.

They have already attracted the ire of the Competition Commission, which seems keen on regulating the price of mobile data in South Africa.

The Minister with which they had a deal to create a “hybrid model” for South Africa’s 4G and 5G spectrum is out. A new Minister now helms the Department of Communications and she does not appear to be a fan of Vodacom.

South Africa’s mobile network operators would do well to foster some goodwill with the public, regulators, and policymakers, or they could very well find themselves facing the pointy end of a nasty regulatory stick.

This is an opinion piece.

Now read: If your cellphone provider doesn’t offer data rollover or OOB blocking – Leave

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Watch out Vodacom and MTN – You’re going to get burned