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You've got to hand it to the Vodacom spin machine: they really outdid themselves this week.
Profits were down as Vodacom announced its results. CEO Shameel Joosub, in the earnings report, said the company had put R2bn back into customers pockets. I had to read that line seven times to make sure I was seeing right.
Vodacom’s data prices have reportedly dropped by 37% this year, tanking revenue. But instead of admitting that a strategy built on price gouging had begun to fail, Joosub turned into Father Christmas, saying customers had enjoyed R2 billion in savings.
Corporates never put money back into your pocket. This is not cynicism, but realism. There’s always a reason if you follow the money. So, for example, you get rewards – or something back in your pocket - to keep you loyal.
In Vodacom’s case, it felt the heat from the regulator, the Independent Communications Authority of SA, as well as from the Competition Commission and from the governing ANC which set out a resolution called #Datamustfall to campaign against high data prices.
Now data prices are falling. I can feel it in my pocket, as you can too.
Vodacom says data prices are down 57% over three years and fell by 37% from May 2018 to May 2019. Regulators can throttle the life out of business, but in this case it’s a good thing that both Icasa and the Competition Commission stepped in. Serial pieces of research have revealed that South Africans pay prices far in excess of those paid for 500MB packages in markets of a similar size.
Data expiry provisions were an almost feudal practice, but our mobile communications companies expired data faster than a pack of Cheddar cheese to rack up significant profits until Rain, the newcomer telco, entered the market with a promise of no expiry, and Icasa ruled that customers could rollover data.
There’s a lesson in this: the regulators and the ANC picked up the campaign after it started in civil society. Amandla.mobi, the civic group pushing for cheaper data, has done excellent work to show how South Africans were being fleeced so that for poor South Africans, the trend is toward mostly-offline rather than always-online. Without access to the Internet, the digital divide will grow and lengthen South Africa’s Gini coefficient, the measure of wealth inequality, rather than close the gap.
Vodacom has brilliant executives in its fold, but surely it should be taking a hard look at a strategy built on price gouging and the creation of data packages which obfuscate real costs for consumers. Is the company spending too much on marketing? Do we need parallel network infrastructure? Is it lobbying hard enough for government to finally auction spectrum by ensuring that digital migration happens?
The telcos are the mining companies of today: they are the economy of South Africa and hold the key to its future but that can’t be a future built on pricing your customers out of the market and giving them a fair deal only when forced to do so.
