Vodacom, MTN at war with consumers

MTN and Vodacom have declared war on consumer interests by seeking to have over-the-top services such WhatsApp and WeChat regulated. By Jose Dos Santos.

jose-dos-santos-180MTN and Vodacom have declared war on consumer interests. The infamous duopoly wants to limit how we use Internet services like WhatsApp — and it has nothing to do with fairness, competition or the future of South Africa. To the contrary, it is all about maintaining their stranglehold on a vital artery feeding our country’s economic and social future.

The two mobile networks have now successfully lobbied government to investigate potentially regulating over-the-top (OTT) services like WhatsApp. I suppose it was inevitable. Vodacom, for example, has said: “You have these [OTT] players which are getting huge benefit out of an industry without making any investment. It has also said: “Operators need to continue making a return.”

MTN has been less diplomatic. Former MTN South Africa CEO Ahmad Farroukh was quoted as saying that MTN was not prepared to spend billions of dollars building networks just so that OTT players can get a “free ride”. His successor, Mteto Nyati agrees: “You have to regulate them because clearly they’re making a huge amount of revenue on top of the infrastructure that the operators have paid for. Somehow they have to contribute towards the building of this infrastructure.”

Suddenly they are concerned with “levelling the playing fields” – but only now, when they face competition.

Regulation itself is not necessarily a bad thing and South African telecoms regulation could definitely use a little modernisation. We need to ask serious questions about privacy, consumer rights and infrastructure sharing to reduce costs. But in this case, that is not Vodacom or MTN’s aim. Instead they are hoping to confuse the issue, rather than sticking to clear, reasonable arguments.

Regulation would impose new costs, costs that would either prompt OTT players to withdraw their services from South Africa or push up prices for the consumer, the very consumer that already pays for the data to use those services.

It is not hard to imagine the motivation of MTN and Vodacom, as both have historically resisted any attempt to “level the playing field” in the mobile industry. They have fought number porting and the elimination of interconnect fees. These are companies that have shown no interest in the welfare of the customers who keep them in business.

We believe that OTT services encourage consumers to participate more. The more they participate, the more they spend. Cell C is still a business and must make money. But good companies adapt and change to create new opportunities for themselves and their customers. Bad companies manipulate the system to only get what they want — the customer doesn’t matter.

Over-the-top services should not be regulated, argues the writer

Over-the-top services should not be regulated, argues the writer

I invite South Africans to interrogate the motivations of companies that would support this kind of regulation.

Connectivity is key to the welfare of a 21st century nation. These platforms empower individuals and communities. They allow people to connect and be part of a global community. Now think of all the conversations we have every day on Facebook, WhatsApp, Google Talk, Skype, WeChat and more. Consider the many services such as Gmail, Office 365, Sage accounting and so on that allow small business to start and flourish.

OTT regulation will force extra costs on those services or force their withdrawal. It will hurt consumers and small companies. It will disadvantage everyone — everyone except the networks whose only interest resides in protecting their revenues.

Cell C has proven that by opting for partnerships instead of bullying, you can work alongside OTT services to the benefit of everyone. We offered free WhatsApp services for a year, during which Cell C customers did not spend any data to send messages. Since we have transformed this into a low R5/month offer and opened our free services to include Facebook.

As a consequence, we have not lost customers. We have grown and those customers have grown as well. They are more connected and informed, but without needing to pay more for the privilege. No, not privilege. It’s a right. It is not fair that those with a voice are only those who can afford to have one.

As I said in the beginning, regulation of the telecoms space is a conversation that should happen. But what MTN, Vodacom and their collaborators are trying to do is not address the big issue. They simply want to protect what they have and they are happy to sell the consumer out in order to get that.

As it stands, Cell C does not support OTT regulation in South Africa, because the only losers will be the people whose money make us all successful businesses in the first place.

  • Jose Dos Santos is CEO of Cell C

Share this article

  • Jonny Petet

    Can see he’s biased, CEO of CellC

  • Richard Wickens

    He may be biased, but if MTN and Vodacom push through legislation that costs me even more money than I currently give to them they will be losing me as a customer. Are they going to ask google to charge each time I do a search on my cell phone? Basically the entire friggin internet is an OTT provider in some way, the reason they are gunning for the messenger applications first is that no one bloody sends SMS’s anymore. If they didn’t charge so much to send SMS’s whatsapp and the like would never have existed in the first place.

  • George Holt

    And it’s not as if they don’t get anything out of it already, we still pay for mobile data to use these apps. Their issue with them is that it’s cheaper to hold a Skype call or send a WhatsApp message than it is to make a standard call or send an SMS.

    In the newer iOS devices, even SMSs are sent using mobile data instead of cell towers!

    They’re taking on some of the largest companies in the world, and it’s no skin off their necks to just stop doing business with these little brats.

  • Richard Wickens

    But that is precisely my point, WHY is it cheaper to use whatapp to send a message? Because they have been ripping us off this entire time, now that messenging apps are replacing their crappy sms service they are crying foul. WE SHOULD BE CRYING FOUL! I also fail to see how my friggin data can expire like a carton of milk, but my airtime balance doesn’t “expire”. That’s another bloody rip off! I can see MTN and Vodacom losing a lot of clients over this stupid idea of theirs.

  • Vusumuzi Sibiya

    >>These are companies that have shown no interest in the welfare of the customers who keep them in business.

    That infamous duopoly of colluding culprits only sees consumers as teats to pull on and fill-up their bottom-less buckets of greed…

    …war is exactly what they’ll get for pursuing this;

    >>OTT regulation that will force extra costs on those services or force their withdrawal. It will hurt consumers and small companies. It will disadvantage everyone — everyone except the networks whose only interest resides in protecting their revenues.

  • Greg Mahlknecht

    I assume that Vodacom and MTN will put their money where their mouths are and boycott Apple devices, because iMessage has exactly the same issues as the apps they’re trying to regulate. If they continue to sell iPhones or Android/Asha phones with WhatsApp preinstalled (last time I got both these phones, WhatsApp was on the homepage in the Vodacom or MTN installed image) then they’re part of the problem they’re trying to solve.

  • Not to me he isn’t. He echoes my sentiments, and those of countless other individuals, not just in RSA, but from all over the world. This all boils down to net neutrality which is a huge debate raging around the world. To claim that he is biased without substantiating it only exposes your own bias towards the duopolists. Besides, what does Cell C have to gain from this? It would be far easier for them to join forces with the oppressive duopolists and make extra money, then to fight for consumers. In fact one could argue that they’re shooting themselves in the foot.

  • DM

    I thought that I pay for the data usage, what concern is it of theirs what I use my data for? If they want to play in this field (OTT), then why don’t you build a competitive service and compete on ‘level playing fields’.

    MTN & Vodacom – You make your money from selling airtime and data, that is your bed. Now lie in it. If you are not happy with the bed you have made for yourself, then get out, make a new one and compete. Don’t try and force us to pay more because you don’t know how to compete with OTT companies.

    I am a happy Cell C customer and now I know why my gut always warned me not to sign up for services with you guys…..

  • Neels

    The more corrupt the state, the more numerous the laws – Tacitus

  • David

    How is he biased, he is telling it as it is, cell c is not in agreement with MTN and Vodacom, what is he biased about?
    Are MTN and Vodacom not fighting about OTT services?
    Read again!

  • Halvor Rosholt

    My understanding is that Vodacom and MTN haven’t REALLY paid for the infrastructure, have they? Their consumers, who they’ve abused from the start with the highest cartelised mobile costs on the planet, have. Am I missing something here?

  • Deon Pretorius

    “MTN’s Nigerian operation is likely to report a profit after tax of approximately R15,9bn for the year ended 31 December 2016”
    That what it’s all about! They really, really don’t care about the consumer! Except maybe our money!

  • AnRkey

    #VodacomMustFall
    #MTNMustFall

  • Ofentse Letsholo

    I must say, I make about 29% of MY calls on Facebook messenger and I find it hard to do a traditional call…the clarity of the call, no more “eish I’m out of airtime” but data that I PAID FOR, MTN AND VODACOM. And that’s what Voda and MTN hate.

  • AnRkey

    Spot on there. This is a clear cut conflict of interest. How can they charge for data on both ends?

  • Ofentse Letsholo

    They are delusional and on some unrecognizable level, they are crazy. They are ISPs a and should accept that, times have changed and they need to adapt or go to another country. The ZAR as it is makes things worse for us so how do they expect us to keep sending SMSs and traditional calls when they themselves still charge an insane amount?!

  • Ferdi

    That is a really good question, because as far as I have it, they were both heavily assisted by the previous government, and for that same reason the granting of a third license took so long. This also explains the huge shareholding that the current government inherited from the previous one in both of them, so in effect the profitability of this duopoly is of great concern to the current government, as it boils down to a very effective taxation of the poor masses.

  • Joe Soap

    While I agree this is not news, it’s sponsored content. There is a lot of that going around these days. The division between sponsored content and corporate propaganda is blurry.

  • Wayne Gemmell

    Where does it end though and how do you apply the regulations to all of those OTT providers. i.e. apps. There are thousands of them, some like firechat don’t even use the cellular networks to communicate. Many of these are free services or ad funded services. I’d gladly pay 100% tax on what I pay to Telegram for messaging (hint R0).

  • Golummmm

    I would have appreciated knowing up front the author was opposition and not editorial staff. Not read entire missive only to realise almost in conclusion this caveat. As it stands it appears quite gratuitous not to mention disingenuous. Even if author is right this still resembles a “paid for advertorial”. Kind of does the.logic injustice by calling into question objectivity. It presents as a fact based on individual, independent research journalism and analysis while only in the end revealing itself as alternative opinion. If I were the other operators I’d take exception to this ” article” and its apparent subterfuge and not only substance

  • David

    The cost of DATA in SA, is already one of the highest in the World as well as being the slowest, the same goes for SMS’S and voice calls. They are pricing themselves out of the market and not keeping up with advancements in Technology, only Cell C is playing the game. Vodacom has always been the most expensive , while Telkom the most problems. It’s my business what I do with the DATA or whatever that I purchased FROM them, so whats their problem — GREED, AND government interference YET AGAIN, THEY ALWAYS want more and more, SIC and CORRUPT.

  • Vusumuzi Sibiya

    Well you would be spot-on Mr Soap…

    If there would be an area where there’s certainly a need to regulate, then perhaps regulation that would require disclosure where content is sponsored would indeed be appropriate here in ZA.

    In a society where there are some who have often perceived the media as being a reliable credible source of news; and where the masses have always not trusted the news from the same sources that others others believe in;

    …such regulation would go a long way towards nation building and ensuring that there are no surprises for those who believe blindly that news in ZA is credible.

  • Jonny Petet

    I started something :O. Anyway, I hate CellC but it’s good that they aren’t fans of this junk.

  • The joke is that this won’t protect their revenues. Vodascum and Empty-N are trying to legislate consumer behaviour to compensate for them having misspent their infrastructure development funds. They still think we all want to SMS and make phone calls. Meanwhile, we all want data. And not much more.

    I don’t see how this will protect their revenues. It will just force people to look for alternative channels by which to access the OTT services they use. Meaning we would look for ways to get by without mobile operators.

  • Andrew Fraser

    I don’t see your point. It is an opinion piece written by the CEO of Cell C, not editorial from Techcentral.

  • William Stucke

    I did some rough sums the other day. Taking into account interconnection, transit and capital costs, I estimated the ACTUAL cost of an SMS as R 0.00000068. Including VAT.

  • William Stucke

    > they were both heavily assisted by the previous government, and for that same reason the granting of a third license took so long.
    What “previous government”? Vodacom launched their services in RSA in June 1994, followed by MTN 6 months later. Cell C was licensed in 2001. The reason that took so long is that THIS government – Aunty Ivy in particular – meddled with the process interminably.

  • William Stucke

    > I would have appreciated knowing up front …
    The name of the author – Jose Dos Santos – is listed twice before the first line of the article. If you failed to read that, and / or don’t know that he’s the CEO of Cell C and haven’t seen his grinning mug shot on TC before, then rather than blaming some imaginary “conspiracy” perhaps you would do better to look to your own industry awareness?

  • Ferdi

    Did the current government lay the foundations and “made the legislative bed” during those first few months in 94?

  • Actually that’s not accurate either. Regulating WhatsApp will not protect profits, it might make Vodascum and EmptyN appear more profitable than they really are for a year or so, at least on paper.

    Because regulating WhatsApp and other OTTs offer no benefit to the consumer, and because alternative data pipes are available, eventually regulating OTTs will catch up with the telcos and they will find themselves less profitable.

    They are being NuMetro and Ster-Kinekor, banking on territorial licensing, in a Netflix world where people want to throw money at them but the regulations make it difficult to do so.

  • I think it is clear from the outset that this is an op-ed, however I do agree that op-eds should be more clearly labelled and offered in an opinion section instead of conflated with general tech news.

  • Exactly. OTT is an artificial, insidious bogeyman. There is for example Opera Max, which is an OTT that saves your mobile data usage.

    Let me put that in perspective for the dinosaurs from telcos who may be reading this: Your argument is that OTTs piggyback on your infrastructure without investing in that infrastructure. Yet this OTT, Opera Max, causes all OTTs to use less of your infrastructure.

    Telcos need OTTs more than OTTs need telcos. Imagine if WhatsApp gets banned in SA because Vodacom and MTN want to regulate WhatsApp. Imagine the drop in revenue both of them will experience, not to mention the drop in new sales since people can’t use their devices for OTTs, not to mention the drop in new contracts since nobody can use data the way they want to, not to mention stifling innovation because fewer people would be able to invest in OTTs if the opportunity costs are more.

  • ICASA is the statutory body (read: government body) and they are entirely post-1994 government.

    Part of the reason why the third licence granting took so long was because the old government didn’t do it. Which is to say they had to update the laws governing ICASA to conform with the new post-1994 Constitution, and they had to find BEE partners, and they had to come up to speed with the tech in the sector, and there were a few interest groups pulling in different directions.

    Pretty much all the copper cable infrastructure relies heavily on old government investment, but the telecoms operators rely less and less on government investment. They rely on us – their victims oops I mean consumers – to invest in their infrastructure.

  • I’m a former EmptyN customer and currently being disillusioned by Vodascum. EmptyN put me off contracts for good and Vodascum’s management are so thick they blatantly lie to us on public forums so I shall give Cell C a go.

    But definitely never ever a contract again. I will rather use two tin cups with a piece of string between than give a mobile operator access to my banking details again.

  • Robert van der Meijden

    Dear ICT Infrastructure owner I.e: Vodacom, MTN, Cell C, Telkom etc.
    It is a fact and even your intention that OTT services increase your data related revenues. Since you invoice the consumer for the data that is consumed, it would seem to me that gratitude would be a far more appropriate response to OTT Apps churning profits for you on your infrastructure. Moreover you would do well to welcome and encourage OTTs riding for free (gratis, and unregulated) on your (not another’s) data highway.

  • Robert van der Meijden

    This is potentially going the way of e-toll. As in, laws to force down products and services that there is no demand for.

Why TechCentral?

We know that as a prospective advertiser, you are spoilt for choice. Our job is to demonstrate why TechCentral delivers the best return for your advertising spend.

TechCentral is South Africa’s online technology news leader. We don’t say that lightly. We believe we produce the country’s best and most insightful online tech news aimed at industry professionals and those interested in the fast-changing world of technology.

We provide news, reviews and comment, without fear or favour, that is of direct relevance to our fast-expanding audience. Proportionately, we provide the largest local audience of all technology-focused online publishers.

We do not constantly regurgitate press releases to draw in search engine traffic — we believe websites that do so are doing their readers and advertisers a disservice. Nor do we sell “editorial features”, offer advertising “press offices” or rely on online bulletin-board forums of questionable value to advertisers to bolster our traffic.

TechCentral, which is edited and written by award-winning South African journalists, cares about delivering top-quality content to draw in the business and consumer readers that are of most interest to technology advertisers.

We’d like the opportunity to demonstrate the value of directing a portion of your advertising budget to TechCentral, whether your company is in the technology field or not. Numerous opportunities exist for companies interested in reaching our audience of key decision-makers in South Africa’s dynamic information and communications technology sector. We offer packages that will deliver among the best returns on investment available in the online technology news space.

For more information about advertising opportunities, and how your organisation can benefit by publicising itself on TechCentral, please call us on 011-792-0449 during office hours. Or send us an e-mail and ask for our latest rate card and brochure.