The expiration of data bundles in Nigeria
The news is that Kenya’s leading telecom company has abolished expiration date on data bundles. As you begin to push for such in Nigeria, postulating “Why must data expire in this 21st century in Nigeria?”, I have some words for you.
Safaricom has abolished the expiry of data, calling and SMS bundles as part of the firm’s plan to be simple, transparent and honest across all its products and operations.
The firm announced the move today as it celebrated 19 years of operation since launch in Kenya. This new development just comes days after the firm was taken to court to end data expiry plans.
Both Data bundles, and Calls and SMS with no expiry are immediately available on *544#
“Today, we are starting afresh and going forward we aim to be even more Simple, Transparent and Honest in everything that we do. For our customers, we are a Safaricom that is there, For You,” said Michael Joseph, CEO, Safaricom
Yes, you paid for it and it is now your property, yet it can expire because the telcos make it so. A Kenyan lawyer took it all the way to the court, suing Airtel Kenya, Safaricom and Telkom. But do not be confused, it is very complicated. I will explain – keep reading.
A lawyer and ICT practitioner has sued three mobile telephone operators, arguing that they are illegally depriving consumers of their unused data bundles.
In a complaint filed before the Communications and Multimedia Appeals Tribunal, Mr Adrian Kamotho said he was aggrieved by the high cost of data and frustrated by the arbitrary expiry of hard-earned bundles.
This is the business logic – by making data bundle expirable, it becomes cheaper for all, since most will never use the fully paid products before they expire! Airlines do the same; by making tickets nonrefundable, ticket prices drop since not many will use all sold tickets, freeing seats for last deal sales. The fact is this: if tickets are refundable, the prices rise!
Yes, airlines will book “seat commitments” on the tickets knowing that the seats could be lost before the planes take off. By raising the price, they cover losses from the cancellations. In other words, if there are ten sold tickets with probability that 2 may cancel, they would ensure that the eight remaining passengers will cover the costs for the ten seats.
But where ticket is nonrefundable, they can make the prices for the ten seats to be low knowing there are no surprises ahead since once a seat is purchased, the revenue is guaranteed.
My point is this: if you make data non-expirable, you will end up forcing telcos to increase the bundle price (or reduce the value at the current price). That may not be a better outcome.
Of course, Safaricom will not be a good case study since its influence in the Kenyan market makes it a monopolist and consequently its pricing cannot be used as a benchmark for a free market. It may simply decide to give away 5% of its revenue since it can afford to do so! But for others, if they have to follow the non-expirable policy, there would be pain at the bottomline.
Source: Tekedia
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