Last year the Independent Communications Authority of South Africa (Icasa) issued proposed amendments to the Electronic Communications Act of 2005.
The proposed amendments would drastically change how network operators charge you for out-of-bundle data and how long that data is valid for. Icasa proposed that data should only expire three years after it was purchased.
For consumers that is great news, but the move was met with opposition from South Africa’s major mobile network operators Cell C, MTN, Vodacom and Telkom.
The reasons vary from network to network but the underlying theme appears to be the cost this represents to the network.
Cell C explains that it has to lease infrastructure from other service providers to be able to provide its customers the mobile broadband of a reasonable speed and quality.
The network says that should data not expire for three years it and other networks will have to lease that infrastructure with no guarantee that it would be used “at vastly increased and unpredictable costs.”
While Vodacom also states that this amendment would incur substantial costs to their network, it also argues that the amendment to the validity period would have an adverse effect on consumers.
“End-user choice will be adversely impacted, because the proposed amendment will remove the choices customers currently have in the market, and the benefit of buying data bundles of different sizes, rates, and validity periods,” said Vodacom.
Telkom mirrored this sentiment saying that should this amendment be passed it would have to withdraw its current offering from the market and redevelop them.
“This will result in data bundles with higher price points and will negatively impact subscribers,” said Telkom.
Like the other three network operators MTN has also slammed the amendments saying it will need to over-provide capacity should data not expire for three years.
The operator also said that its balance sheet would be negatively affected should people not buy data for three years.
“MTN’s balance sheet will also be affected by the fact that MTN will not be able to recognise revenue for data bundle purchases until the data is utilised. The increased financial unearned revenue liability on the balance sheet will have a negative impact on the MTN’s overall cost of capital,” said the operator.
This – MTN says – will result in a lower income tax payable to the Treasury.
The full replies from Cell C, MTN, Vodacom and Telkom are available on the Icasa website and we recommend reading them ahead of the public hearings on the matter.
As a matter of fact those hearings are scheduled to take place from 1st to 2nd March at Icasa’s head office in Sandton, and members of the public are invited to attend the hearings.[Image – CC BY NA Pixabay]