Telkom has asked communications regulator Icasa to refrain from “overreach” that might remove some of the levers it uses to compete against its larger competitors in the data and voice markets.

Speaking at public hearings regarding proposed amendments to the end user and subscriber service charter regulations in Pretoria on Tuesday, Andrew Dawson, executive for product, segment marketing and customer experience at Telkom, told a panel of Icasa councillors that some of the amendments proposed are already offered by Telkom as a way of differentiating its offering from competitors. These include data bundle carryover and longer validity periods before data expires, meaning the compelling aspects of its value proposition would diminish if these behaviours became industry standard through regulation.

“We are not completely opposed to what has been put forward, but we definitely have some concerns,” Dawson said at the hearings. “It is very difficult to compete as a small operator where you don’t have clout. Therefore, pricing and promotion are very important to us. We don’t want what we are doing to become the minimum standard because that takes away our competitive advantage as a disruptor in the market.”

Icasa in 2022 published draft amendments to its end-user and subscriber service charter regulations in which it proposed that telecommunications operators be forced to roll over data bundles for a minimum of six months. The draft regulations also dealt with the rollover of voice and SMS bundles.

In the latest revision of the draft regulations, Icasa aims to:

Treat all service bundles that customers may purchase in the same way, be they voice, SMS or data;
Ensure that social media and similar bundles are also treated similarly;
Provide staggered provisions for the automatic, partial rollover of unused portions of service bundles of seven days or longer;
Give certainly as to the full duration of very short bundles (for example, one hour equals 60 full minutes and one day equals 24 full hours); and
Protect the right of consumers to transfer bundles or bundle portions between Sim cards on the same network.

Dawson said it is difficult for a business to find ways to differentiate itself when the product being sold – data – is the same. Telkom has found ways to innovate in this market by offering time-based bundles that “align with customer demand”, which has enhanced competition among operators, he said.

Telkom data shows that customers, especially those in lower segments of the market, tend to opt for small denomination bundles with time usage limitations because these better suit their needs. He said Telkom is able to offer these promotional bundles at a lower cost specifically because their use is limited by time, and it could not provide equivalent value to its consumers otherwise.

Significant effort

Telkom has asked Icasa to change the definition of “short-term bundles” to include seven days, so that weekly bundles are included in the definition instead of falling into the definition of medium-term bundles instead.

Like MTN, which made its presentation to Icasa earlier on Tuesday, Telkom has argued that implementing some of the proposed amendments would require significant effort on the part of operators to make their systems compliant, yet the potential benefit to consumers could be marginal or even nonexistent.

Read: Icasa data expiry plan is regulatory overreach, MTN says

Dawson said the implementation efforts could unintentionally lead to cost increases that end up harming the consumer. He said the amendments are also likely to increase the regulatory burden placed on licensees without necessarily benefitting consumers.

Telkom argued that data should only roll over if it was purchased by the end user, meaning transferred data should not be allowed to roll over. It also argued, as MTN did, that extending rollover functionality to voice and SMS bundles is unlikely to lead to increased benefit for consumers.

“The highlighted regulations require all licensees to treat all mobile services in the same way, thus limiting innovation, competition and consumer choice. This will lead to limited product differentiation, the withdrawal of products and increase the cost to communicate,” said Dawson. – © 2024 NewsCentral Media