Warning about data bundles in South Africa

“Mandating that all bundles last three years would introduce significant challenges,” a Cell C spokesperson told MyBroadband.

“‘Evergreen’ data may sound appealing, but it poses significant challenges for network management, capacity planning, and resource distribution.”

Cell C explained that the strain placed on infrastructure to effectively handle this perpetual data flow would be substantial.

“Along with the increased capacity demands necessary to maintain optimal network performance, it could potentially have a negative impact on the affordability of services for customers,” it warned.

This comes after Mzwandile Masina, chairman of the Parliamentary Portfolio Committee on Trade, Industry, and Competition, reopened calls for all data bundles to be valid for a minimum of three years.

The committee had heard the views of the National Consumer Commission (NCC), the Independent Communications Authority of South Africa (Icasa), and the Competition Commission on the subject.

“Data bundles and prepaid vouchers should be subject to Section 63 of the Consumer Protection Act (CPA), which requires a three-year validity period unless a longer period is agreed upon,” Masina said.

It also said the committee emphasised that access to affordable data was critical to society, as it was the gateway to accessing information in this economy.

“In particular, it was unacceptable that unused data or minutes should expire, as often vulnerable groups of people use their last money to purchase these bundles,” the committee said.

The committee believed this constituted unfair and exploitative trade practices, effectively denying large parts of society access to information to improve their livelihoods.

“Thus, it appeared that business was putting profits before the protection of consumers,” it said. 

“Therefore, according to the committee, there is a need for more stringent legislation to protect consumers from these practices.”

Walking in circles

This is not the first time South Africa’s regulators have considered forcing mobile operators to offer a minimum three-year validity period on all data, voice, and SMS bundles.

In 2017, Icasa asked for public comment on proposed amendments to its End-user and Subscriber Service Charter (EUSSC).

A few months later, the National Consumer Commission attended Icasa’s public hearing on the draft regulations and asserted that, under the CPA, data bundles must last for at least three years.

South Africa’s mobile operators and other stakeholders argued that the commission was misinterpreting the law.

Ultimately, when Icasa published the final EUSSC regulations, it excluded minimum data bundle validity period requirements.

Instead, they included provisions for mobile operators to enable consumers to monitor their usage and control spend, roll over and transfer unused data, and disallow out-of-bundle billing without consent.

Icasa also ended up softening its proposed regulations on out-of-bundle billing. It allowed operators to continue billing out of bundle, provided they used the prevailing in-bundle rate for doing so.

Unintended consequences

Vodacom and MTN agreed with Cell C that regulating the minimum duration of data bundles would have unintended consequences.

“If all data bundles were required to expire after three years or more, operators would lose the pricing flexibility that currently allows them to tailor bundles to different consumer needs,” a Vodacom spokesperson said.

“Prices would converge towards a single, higher price point, forcing MNOs to offer only long-validity bundles and removing the cheaper short-term options available today.”

Vodacom also cautioned that this would eliminate product differentiation, stifling competition and innovation, as all operators would be constrained to a uniform three-year validity model.

“The ultimate consequence would be higher data prices across the board. Low-income consumers who rely on affordable, short-term bundles would be disproportionately affected,” it said.

“This would widen the digital divide and undo much of the progress made in advancing digital inclusion.”

MTN explained that data expiry is a mechanism used to manage the limited wireless capacity available to mobile networks.

“Extending all data validity to three years would require significant changes to how networks allocate and reserve resources,” an MTN spokesperson told MyBroadband.

“This could lead to increased operational costs, reduced pricing flexibility, and potential strain on network performance, ultimately impacting service quality and affordability for consumers.”

MTN explained that the way things work right now is a customer-centric approach designed to enhance accessibility and convenience.

“Data bundles are offered in various durations — some last a year, others a month, a week, a day, or even just an hour,” an MTN spokesperson told MyBroadband.

“This provides customers with flexibility and affordability, allowing users to choose bundles that best suit their usage patterns and budgets.”

MTN said it remained committed to constructive engagement with regulators and policymakers to ensure that any future changes are sustainable and in the best interest of all South Africans.

Cell C said that Icasa, as the independent regulator, is best placed to determine the appropriate framework in consultation with all stakeholders.

Telkom was contacted for comment about the Parliamentary committee stating that all data bundles must last three years, but it did not respond by publication.

Issued on MyBroadband by Jan Vermeulen | https://mybroadband.co.za/news/cellular/612158-warning-about-data-bundles-in-south-africa.html