The Independent Communications Authority of South Africa's (ICASA's) recent draft regulations on mobile data expiry and changes to out-of-bundle billing practices for telecoms operators could unintentionally raise data prices.
This is according to Africa Analysis senior analyst Ofentse Mopedi, who says while the proposed changes to the End-User and Subscriber Service Charter Regulations appear to be a positive step for the highly competitive data market, they may unintentionally affect consumers in a negative way.
"We may see operators adjusting their bundles, with the in-bundle rate/MB for various bundles going up; this may be done in a bid to maintain data revenue growth," Mopedi says.
This after ICASA on 7 August published new draft regulations, which include new timeframes for the expiry of data bundles and new out-of-bundle billing rules which include that consumers will need to decide to opt-in to out-of-bundle pricing on data, voice and SMS services if their bundles have been depleted.
BMI-TechKnowledge MD Ryan Smit says the impact will largely be determined by the way networks respond in terms of pricing.
"As they have likely factored 'data-breakage' into their pricing models, we could see prices of data bundles increasing in some cases. So for those who typically use their bundles before they expire, it may not benefit them, while those who frequently have their data expiring could benefit," Smit says.
Mopedi believes consumers will, however, likely benefit in two ways.
"If the proposed changes are implemented as they currently stand, then we are likely to see a reduction of myriad data bundles (ie, hourly, daily, weekly, fortnightly, monthly and so forth) currently offered in the market that often confuses consumers when trying to determine the appropriate bundle for their data consumption needs.
"Secondly, consumers will save money as they will no longer forfeit data as a result of an expiry date, particularly those opting for higher capacity data bundles," Mopedi adds.
Expiry dates
ICASA laid out a proposal for the validity periods for data, with the shortest being 10 days for bundles between 1MB and 50MB, and the longest being 24 months for 20GB and above. This will be a big change from how mobile operators currently operate in terms of data expiry and would completely rule out some of the myriad data bundles that Mopedi referred to.
The regulations also stipulate that consumers will need to choose to opt-in to out-of-bundle pricing and not be automatically switched once their data or voice bundles have been depleted.
"I think these guidelines will have impacts on pricing across the board, and out-of-bundle rates may be one area where networks look to make up for this loss in revenue. However, it would be a very unpopular move with consumers as out-of-bundle rates are already perceived to be very high," notes Smit.
Mopedi says this will provide some protection to consumers as far as out-of-bundle pricing is concerned, but operators will likely overhaul their bundles and increase the in-bundle rates to make up for the revenue they currently generate through their punitive out-of-bundle rates.
"However, ICASA will probably keep a close eye on the operators, and depending on how they respond to these changes, we may see data pricing regulations introduced in 2019/2020," Mopedi believes.
Cost to communicate
"It is important to understand that these regulations are not really intended to curb the perceived high data costs in the local market, but rather to allow consumers to enjoy full value for their money, as well as to make sure operators no longer take advantage of consumers through their exorbitant out-of-bundle data pricing habits," Mopedi points out.
The debate over the high cost to communicate in SA has been raging for some time and gained traction last year when South Africans took to social media to complain about high mobile data costs under the banner #DataMustFall.
Since then, ICASA has begun a number of initiatives to tackle the issue, including in July starting an inquiry to determine the priority markets in the electronic communications sector. ICASA says it aims to finalise the inquiry on or before 31 March 2018.
Mopedi says to achieve the objective of driving down costs, the regulator will likely wait for Communications Regulators Association of Southern Africa (CRASA) to finalise its universal retail mobile data regulation for SADC countries to be enforced in the region by 2019. He says these tariffs will likely have a tangible impact on the South African market, depending on the established prices.
"If the standardised rates are higher than the average rates charged by local operators, operators could have an excuse to increase prices in line with implemented regional prices. However, if the standardised rates are set lower than current tariffs, then weaker players that have implemented consistent data price hikes over the past years, could be left with little room to adjust prices.
"CRASA's initiative aims to ensure mobile data charges are uniform and affordable in all SADC countries. ICASA will likely embrace this initiative to drive down mobile data costs," Mopedi adds.
Depletion notifications
Vodacom spokesperson Byron Kennedy told ITWeb that hybrid and post-paid customers already pay a flat rate of R1 per MB on data used out of bundle ? and this has halved since 2007.
"In recent times, we have accelerated a number of initiatives to encourage in-bundle usage and expect to make announcements with regard to out-of-bundle prices in due course."
ICASA's proposed regulations are quite specific about how often operators need to send data depletion notifications, saying the intervals must be at 50%, 75%, 90% and 100% depletion levels for data bundles.
Kennedy says Vodacom already sends regular in-bundle data usage notifications that include personalised offers. Post-paid customers are also sent out-of-bundle data usage notifications in rand value, with the first out-of-bundle trigger sent at R10 spend.
Smit believes the specific data depletion notifications are a good and fair practice, especially for networks that have high out-of-bundle rates, which can be a nasty surprise for the consumer at the end of the month.
Mopedi agrees this will make users aware of how much data they have and when they need to top-up but "will have no impact for consumers from a cost perspective".
"This is because consumers will need to agree to be billed out-of-bundle charges as a result of the new amendments, unlike in the current dispensation where consumers are charged hefty out-of-bundle rates whenever their bundles are depleted," Mopedi says.
Cell C, Telkom and MTN all previously told ITWeb they were looking at the draft regulations and would submit comments to ICASA within the stipulated deadline.
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