MPs open probe on data expiry, Safaricom Bonga pointsFriday November 25 2022
Parliament will probe telecommunications firms for imposing expiry dates on data bundles, airtime and loyalty programmes such as Safaricom’s Bonga Points, setting the stage for a fresh battle between the lawmakers and the operators.
The National Assembly’s committee on Communications, Information and Innovation says it will also inquire into the widespread Internet speed throttling practice by internet service providers (ISPs).
Telcos and ISPs require consumers to use their data bundles within limited periods, usually a day, a week or a month.
But operators like Safaricom have recently introduced no-expiry services, which have less generous data, less SMS or shorter talking time.
This week Safaricom introduced an expiry date on Bonga Points in a bid to encourage redemption and unlock the underlying revenue that totalled Sh4.5 billion as of march this year.
The listed telco has told subscribers that all unredeemed Bonga points will now be expiring after three years, meaning that those accumulated before December 31, 2019, will expire effective January 1, 2023.
Parliament now wants the ICT Cabinet Secretary, Eliud Owalo, to explain the rationale behind the imposition of expiry dates on the services.
The House inquiry was triggered by a statement sought by Kamukunji MP Yusuf Hassan raising concerns over the expiry of unused data bundles and widespread Internet throttling practice by the ISPs.
"There is a need to protect Kenyan Internet consumers who find themselves exploited by the expiry of data bundles before they can deplete it, and deliberately reduced Internet speeds," Mr Hassan said in the statement.
The lawmaker said forcing expiry dates on subscribers only benefits Internet providers and has a negative impact on efforts to promote digital adoption in the country.
"The high cost of data bundles coupled with these imposed expiry periods, has largely disadvantaged millions of Kenyans who are arbitrarily deprived of their unused data bundles, already paid for in full," said Mr Hassan.
Ainabkoi MP Samuel Chepkonga described the expiry of data bundles as "robbery without violence" and demanded that the ICT committee summon the Communications Authority of Kenya (CA), the ICT Cabinet Secretary and telecommunications firms Safaricom, Airtel, Telkom Kenya and ISPs.
Lawmakers say Kenya should learn from the South African experience where the telecoms regulator in 2019 issued new rules that demand operators must let customers roll over unused data at no cost.
Safaricom termed the move to put an expiry date on the Bonga points a business decision aimed at encouraging redemption.
The value of outstanding or unredeemed points has been going up over the years—hitting Sh4.5 billion in March 2022 from Sh3 billion in 2015— despite the company expanding the options for redemption to include the purchase of shares at the Nairobi Securities Exchange (NSE), airtime, phones and even flight tickets.
The loyalty points are recognised as a liability, or deferred income, in Safaricom’s books and are only booked as revenue upon redemption by customers either for airtime, SMS, merchandise or shopping.
The company also recognises loyalty points on churned SIM cards as revenue. Safaricom uses the same concept to recognise airtime revenue. Prepaid airtime sold to customers is held as deferred revenue until the customer uses it.