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Cellphone networks forced to explain high data costs

Cape Town - Representatives from major cellphone networks were left scrambling for answers when they were hauled before Parliament’s Portfolio Committee on Telecommunications and Postal Services amid the #DataMustFall social media uproar.

Vodacom, which had been deemed the country’s most expensive, but also most successful network in terms of subscriber numbers and revenue, faced most of the heat from MPs yesterday.

A Vodacom outlet in Midrand, Johannesburg. The cellphone network faced most of the heat from MPs on Wednesday. File picture: Simphiwe Mbokazi. Credit: INDEPENDENT MEDIA

The network’s charges for both data and voice calls were shown to be higher than those of its competitors, MTN, Cell C and Telkom.

Despite this, Vodacom’s managing executive, Zunaid Mahomed, said the company had seen an 86 percent spike in data utilisation in the past year and a further 32 percent increase in smartphone sales.

But the EFF’s Fana Mokoena criticised the cellular giant.

“There’s a lot of hiding behind jargon, terms and conditions and so forth,” Mokoena told the committee. “What is important, but also a fact, is the cry we’ve been hearing from people that tariffs are too expensive. I know that in Tanzania, where Vodacom has operations, that data is cheaper there. Another fact is that we know Vodacom has the most expensive tariffs in the country.”

The DA’s Cameron MacKenzie came to Vodacom’s defence, saying the company shouldn’t be criticised too harshly.

“I’m glad the Honourable Member (Mokoena) mentioned Tanzania, because I was fortunate enough to visit the country 15 years ago when Vodacom and MTN first launched there,” MacKenzie said. “So when we start reprimanding companies like Vodacom, we should do so softly, because there’s a great deal of economic contribution it has made not only in our country, but in other developing countries.”

Vodacom said it had invested R8.6 billion in infrastructure in the last year and another R26bn three years ago.

Fielding other questions like the cost of doing business in South Africa compared to other countries, Mahomed conceded “we don’t actually have an answer”.

Mahomed defended the company’s price packages: “You pay for what you’re getting in terms of the validity and quantity. Our price for one Gig of data is R149, but in addition, we believe we offer superior value in terms of the overall package the customer is getting and we think that needs to be taken into account. We also believe we have the best network.”

Vodacom’s Question and Answer session went overtime as MPs peppered the company’s representatives.

“Just explain the issue of the data expiry, use it or lose it,” committee chairwoman Mmamoloko Kubayi asked. “If you think of data as a river that’s flowing and you can dip into the river whenever you want, but you don’t dip into the river, that data is lost,” Vodacom’s executive head of innovation, Jannie van Zyl answered.

Mokoena said: “What Vodacom, and perhaps other networks are not taking into account, is that people are complaining. They are not just complaining about tariffs, they are complaining they are being given data that gets finished quicker. And this is a fact. I’m a user myself and I’ve experienced this also so I’m speaking from personal experience.”

While MTN and Cell C’s presentations went smoother and more timeously than that of their rival, the former came under fire for charging customers in other countries like Nigeria and Ghana cheaper tariffs.

MTN chief financial officer (CFO) Sandile Ntsele explained: “We don’t have a situation where the South African rand can trade with the Nigerian naira. What you have is that the common denominator being the US dollar. Now, the dollar price depends very much on what the exchange rate between the two countries is,” Ntsele said.

Cell C, which has been found to be one of the cheapest networks in the country, had it a little easier. The company’s Christian Mhlangu said: “Our market share has grown considerably since our launch, but because we’ve tried to keep our prices low, we’ve not made much revenue over the years.”

Earlier in the day, the Right2Know campaign also made submissions to the committee.

According to the organisation, South Africans in the country’s rural areas spent up to 22 percent of their income on data and voice calls.

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