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Cellphone giants fingered over steep out-of-bundle costs

Publish date: 14 March 2018
Issue Number: 1723
Diary: Legalbrief eLaw
Category: Telecoms

The war on high prepaid and out-of-bundle data rates seems never-ending. And Legalbrief reports that government and the country’s mobile phone networks appear to be on a collision course over exorbitant data costs. Amid reports of the top two networks charging up to 2 639% more for out-of-bundle data, Vodacom has said it is normal business practice to offer discounts to customers who make longer-term commitments. Despite a push by government and Icasa, out-of-bundle data rates are much more expensive than in-bundle. MyBroadband has revealed that data rates on both the Vodacom and MTN networks were reported to be exponentially higher when users ran out of data bundles. It was reported that while on contract, a Vodacom 20GB data bundle cost R329, which worked out to R0.02 per MB, but out-of-bundle the rate per MB was R0.44, 2 630% higher than an in-bundle rate. Similarly, MTN’s 25GB contract bundle costs R1 250, equating to R0.05 per MB and out-of-bundle cost R0.99 per MB, 1 928% more expensive than in-bundle. Minister of Economic Development Ebrahim Patel recently said bringing data prices down will be a priority for the government in 2018. President Cyril Ramaphosa also weighed in on the issue in his State of the Nation Address, saying increased competition and lower communications prices are high on his agenda. Despite the verbal onslaught, however, there remains a large gap between contract, prepaid, and out-of-bundle data prices. Fin24 reports that last year, Icasa stepped into the ongoing row between consumers and network providers over the high cost of data by releasing draft regulations on out-of-bundle data pricing and expiry. The report notes that Icasa stated that costs were still not consistent with the Consumer Protection Act, according to the National Consumer Commission (NCC).

Full MyBroadband report

Full report on the Fin24 site

The NCC has stated its position, saying data, prepaid voice and SMS bundles must be valid for three years. This comes after mobile operators panned draft regulations from Icasa which seek to set minimum expiry periods for bundles. A report on the Brinkwire site notes that mobile networks said the move will cause prices to increase and impact their ability to compete effectively. It will also cause subscribers who rely on hourly, daily or weekly bundles to be excluded. Operators also stated that the Consumer Protection Act came into effect years ago and the NCC has not made any pronouncements about prepaid data bundle expiry – leading them to believe that everything was in order. The NCC disputed this, however, saying it has engaged mobile operators on the matter.

Full report on the Brinkwire site

Mobile phone companies are monitoring government closely. As previously reported in eLaw & Management, Vodacom CEO Shameel Joosub earlier this month warned that the Electronic Communications Amendment Bill is the telecommunications’ industry’s mining charter. Moneyweb reports that he was referring to the charter that has led to investor uncertainty and undermined investment in the mineral resources sector. He said a proposal in the Bill that operators be forced to return their existing spectrum is hugely problematic. ‘The impact of this is investment will slow down. When telcos invest, they invest for the long term. The minute you start to talk about returning spectrum, it makes the entire network useless. We have R100 billion invested in our network. If we have to return the spectrum, that’s the same as expropriation, and that would mean the network is dead,’ Joosub reportedly said.

Full Moneyweb report