Right2Know Campaign

R2K pickets MTN & Vodacom for affordable quality cellphone services

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On World Press Freeodm Day – 3 May 2013 – the Right2Know Campaign picketed outside MTN and Vodacom regional offices in the Western Cape demanding affordable quality cellphone services in South Africa.

The Campaign submitted letters addressed to the CEOs of MTN and VODACOM addressing four major areas of concern. The letters invited the two market dominators to respond on the 12 June 2013 at 12h00 on the pavement outside Parliament.

1. Cellphone Profiteering

South Africa is failing to realise the democratising potential of telecommunication in large part because MTN, VODACOM and the other cellphone operators have maintained high prices of your services that you offer. Statistics from 2011 from the International Telecommunications Union place the country 77th out of 82 countries in a price basket review. This is a disgrace considering we have a relativity large market and well established infrastructure.  We can only conclude that you are profiteering at the expense of South Africa’s people.

As you are aware the production cost of an SMS is estimated1 at R0.026 yet MTN and VODCOM charge up to R0.80 for an SMS. This amounts to 3200% profit and is higher than all the other networks. Similar calculations cannot be made regarding the actual cost of airtime and other services because Vodacom and other operators keep necessary information secret (see #4 below).

MTN and VODACOM benefit in particular from termination rates, which we believe are still too high in spite of recent reductions, because as a virtual duopoly the majority of calls terminate on your networks. Despite this reality, when ICASA has regulated a reduction in termination rates MTN and VODACOM are also the two networks that have not passed this reduction on sufficiently, despite claims to the contrary.

  • We call on you to make SMS free all day and everyday, pass the full reduction in the price of termination rates on to your customers and support ICASA to introduce other measures to bring down the cost of communication.

2. Quality of services & investment in the network

Despite your massive profits you are failing to deliver the services you promise. According to ICASA, VODACOM has consistently failed to meet ICASA’s quality-of-service targets. We are faced with the daily frustrations of dropped calls and lack of network coverage. Services that promise 3G internet access are often only available in more affluent urban areas and are all extremely limited in our rural areas.

  • We call on you to invest in the maintenance and development of your network and make detailed plans to this effect available to the public.

3. Unethical and possibly illegal business practices

Many Vodacom customers lose airtime, sms or data bundles because they expire before they are used. According to the Consumer Protection Act and the National Consumer Commissioner, Vodacom’s practice of forcing customers to forfeit airtime or bundles after a certain amount of time is unfair and the Consumer Act says that all vouchers should remain valid for three years.

This practice – a means to force people to spend more – is motivated purely by profit and impacts disproportionately on pay-as-you-go customers who are more likely to be from poor communities with less disposable income. In our view this practice is tantamount to theft. At the very least people should get what they paid for.

  • We call on you to comply with the Consumer Act immediately.

4. Cellphone Secrets

The Right2Know Campaign is committed to an open society where powerful institutions are held to account. In the case of the cell phone industry transparency and access to information are critical to enable effective public engagement, ICASA regulation and consumer choice.

VODACOM and MTN often failed to embrace this spirit of accountability. You have failed to provide ICASA, Parliament and the United Nations’ International Telecommunication Union with information regarding your services, business costs, and price structures.

You also market your services in a manner that makes it very difficult for consumers to compare offerings across your packages and across different networks.

  • We call on you to provide ICASA and the Parliamentary Portfolio Committee on Communications with all the information that they have requested and that you simplify your product offerings and present easily comparative information to consumers.

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