Why data expires in South Africa

Mobile data bundles expire in South Africa as a mechanism for network operators to manage the limited wireless capacity available to cellular networks.

This was explained by MTN SA CEO Charles Molapisi to the Parliamentary Portfolio Committee on Communications.

Molapisi and executives from South Africa’s other major mobile network operators were “invited” to appear before the committee and were grilled for over an hour.

Among the questions MPs raised was why operators expired people’s data, and whether they profited from the practice.

Several MPs indicated that they understood the need for expiring data, but were asking the question on behalf of constituents who should receive an answer directly from the operators themselves.

Some MPs also asked why airtime expired. It is unclear whether they just misspoke and meant to refer to bundles, as airtime does not expire.

“The network is a finite resource. When you price for the network, as a matter of principle, you need to price with the resource allocation in mind,” Molapisi said.

“When I set a price and create demand on my network, how much of the demand can I sustain and am I able to support?”

Molapisi said that when they design the business rules governing data bundles and similar products it is never to mislead.

He acknowledged that it could be confusing and that consumers might find it annoying. However, he likened the concept to purchasing a bus ticket.

“If you buy a ticket to Mthatha, you can’t say I’m going to use it again in December next year and every time I want to get into a bus, I must find my seat available,” said Molapisi.

If the bus operator sold tickets on this basis, it would have to overinvest in buses, and many of them would run empty, ultimately resulting in a considerable price increase.

Data not a loaf a bread

Vodacom SA CEO Sitholizwe Mdlalose agreed with Molapisi and expanded on his explanation.

“We set data prices based on how we dimension the network,” Mdlalose said.

“So, we say this is what we need to input into the network to be able to carry the data and therefore charge on that basis.”

Mdlalose said the price of a bundle that doesn’t expire is more expensive. “Longer-validity data bundles are available on the network, but you’ll see that the shorter validities are cheaper,” he said.

He added that, like MTN, they offer customised pro-poor bundles to people that take into account their spending patterns and location.

“To buy a data bundle is not like buying a loaf of bread. It is buying access to something, almost like buying a Gautrain ticket,” Mdlalose said.

“You can buy a Gautrain ticket for a week, for two days, for a return, for a month, and it’s the access that it’s giving you to that service.”

Mdlalose said that to create something with endless accessibility would significantly increase the price.

He said that offering shorter validity periods is a tool that Vodacom has used to make the entry points more affordable.