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Huge price gap between in- and out-of-bundle data

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 16 Oct 2017
The regulator has broken down the difference between in-bundle and out-of-bundle data prices.
The regulator has broken down the difference between in-bundle and out-of-bundle data prices.

Vodacom has the highest variance between in-bundle and out-of-bundle data prices, while Telkom Mobile has the lowest.

This is according to figures from the Independent Communications Authority of South Africa (ICASA) published in its Bi-annual Report on the Analysis of Tariff Notifications.

The report covers the period from January to June, and highlights and compares the different tariff plans or offerings in the market during that time. The regulator did a comparative analysis of prepaid data bundle prices charged by SA's four mobile operators. This shows the difference in data prices charged in-bundle versus out-of-bundle for the same amount of data.

"Vodacom has the highest absolute value variance for both 500MB and 1GB, while Telkom Mobile has the lowest for both data bundles," ICASA said.

According to ICASA's information, the percentage variance for 500MB of data ranged between 110% and 910%, with Vodacom having the highest variance percentage and Telkom Mobile the lowest. On the 1GB data bundle, variance ranges between 1 274% (Vodacom) and 200% (Telkom Mobile). Cell C charged the same amount as Vodacom for a 1GB data bundle, R149, but its out-of-bundle rate was far lower with its variance standing at 656%. MTN's variance between in-bundle and out-of-bundle for 1GB was 534%.

Prepaid data in-bundle cost vs out-of-bundle.
Prepaid data in-bundle cost vs out-of-bundle.

ICASA's figures peg out-of-bundle rates for the four operators across their bundle options. The highest out-of-bundle data rate for the period was R2/MB from Vodacom, followed by Cell C at R1.10/MB, MTN at R0.99/MB and cheapest being Telkom Mobile at R0.29/MB.

Vodacom and Cell C have since dropped their out-of-bundle rates for some packages. Vodacom announced earlier this month that out-of-bundle rates for prepaid customers would drop to R0.99/MB as of 15 October, making it level with the price MTN charges.

Cell C in September announced it would reduce out-of-bundle data rates on some prepaid plans to R0.15/MB from 1 October, effectively making it the cheapest.

However, ICASA's data from the first six months of the year shows Telkom Mobile had the lowest charges for most of the prepaid data packages.

ICASA also found the lower the size of the data bundle the lower the variance and the higher the size of data bundles the higher the variance. For example, the absolute value variance in rands for a 500MB ranged from R76 (Telkom) to R901 (Vodacom), and for 1GB of data ranged between R197.96 (Telkom) and R1 899 (Vodacom).

When looking at higher value bundles it was far higher; for example, for a 10GB bundle the absolute value variance ranged from R2 470.60 (Telkom) to R19 811 (Vodacom), or 495% to 3 319%. For 20GB bundles the in-bundle and out-of-bundle variance was between R5 040.20 (Telkom) and R39 961 (Vodacom), or 561% to 4 000%.

However, when looking at in-bundle rates, ICASA found the cost per MB decreased as the value of the data bundle increased. The figures show a Vodacom customer that purchased a 1GB data bundle paid an in-bundle rate of R0.15/MB, whereas a Vodacom customer that purchased a 20GB data bundle paid R0.05/MB in-bundle.

This is similar to MTN where an in-bundle rate of R0.16/MB was charged for a 1GB data bundle and R0.06/MB for a 20GB data bundle. Telkom Mobile's in-bundle rate was R0.10/MB for a 1GB data bundle and R0.04/MB for a 20GB data bundle. Cell C's in-bundle rate was at R0.15/MB for a 1GB data bundle and a 20GB data bundle cost R0.05/MB.

Tariff per megabyte for a 30-day data bundle.
Tariff per megabyte for a 30-day data bundle.

"Even though the report is retrospective, it does, however, serve as an important information dispensing tool, in that most plans are likely to still exist in the market beyond the period under review, thus it still does provide important insights to consumers," ICASA said.

"ICASA will continue to publish such reports to ensure retail price transparency within the electronic communications sector, thereby assisting consumers to make informed decisions during their consumption of electronic communications services."


ICASA said the price differentials between in-bundle and out-of-bundle data rates "are excessive" and its data shows they can be as high as 4 000%, "which disadvantages customers, who are unable to afford to buy a recurring/monthly bundle upfront".

"To this end, the authority has undertaken various initiatives to address calls for regulatory interventions towards a potential reduction of data charges," it added.

In July, ICASA began an inquiry into the cost to communicate and the Competition Commission followed in August with its own inquiry into the high price of data services in SA. The ICASA inquiry is due to be completed by March 2018, while the Competition Commission will be done by August 2018. As part of the report, ICASA said it would initiate another study into the price of mobile data in SA, this time comparing SA to other countries.

ICASA said it has also established a task team, together with the National Consumer Commission, to address challenges that have been raised by consumers with regards to the business rules of mobile data services, particularly in terms of the expiry of unused data bundles and the differentials between in- and out-of-bundle rates. This process resulted in the amendment of the End-user and Subscriber Service Charter Regulations, with new draft regulations published in August.

ICASA said it has noted the concerns behind the #DataMustFall campaign and is "currently working on various regulatory initiatives to ensure data and any other communication services become affordable for consumers".