Millions of South Africans are accustomed to doing nothing other than choosing a new phone when their contracts renew every two years. Because we often want a high-end phone that we can hardly afford on our current contract, we end up paying in.
It’s a strange situation. We shop around to save a few rand on electronics, but so often you’ll find admissions from people that they’ve been on the same contract with the same service provider for five/six/ten years. And then the moaning starts… “I spend R1 000 a month with them!” or “My bill has doubled in the past year and I’m not using my phone more!”
But it doesn’t have to be this way. Not with a raft of value-added services, mobile number portability, and competition – real competition – in the market.
(This is the first of a series of columns offering tips and analysis when choosing and comparing mobile contract offers in the market)
Keep your number, regardless
Number portability’s the key. It’s such a simple process to move networks and still keep your old number (you could have your 082 number on MTN for example). Operators are in a catch-22 here. They don’t really want their existing customers (especially contract ones) to know too much about porting, but they need to try sign potential new customers. The easiest way to deal with moving, is to speak to whichever network you’ve chosen to move to.
Find the right contract
This sounds difficult, but it isn’t. First, get a detailed copy of your bill which breaks down your usage (It’s probably a good idea to have a look at the past two or three months to get a more average view). Then figure out what you’re spending money on. Are you mostly making calls? When are you making most of your calls? If it’s during the office hours, then an off-peak contract is costing you money. This is a classic mistake. Consumers are seduced by the lower per month cost, and end up paying many times more per month than if they’d chosen the right package to begin with. Are you sending lots of SMSes? Using lots of data? Then add bundles (more on that below).
Also, figure out the portion of your monthly fee that’s effectively a subsidy for your phone. On MTN, this is easy as its contracts are based around monetary value. For example, the AnyTime 200 contract costs R200 a month and gives you R200 worth of airtime.
If you’re paying R399 a month for this, you’re effectively paying R199 a month to subsidise your handset. Cell C’s new Straight Up contracts are similarly easy to figure out. Vodacom’s are slightly trickier, partly because they have a larger number of different contracts (although the number of these has dropped noticeably recently), and because its contracts are still based around “minutes”.
Also, Vodacom has three contracts that despite costing around R200 per month, give you no (as in zero) bundled minutes, but only lower call rates. Vodacom’s Smart Plans are the new wildcard. Like Cell C’s Straight Up packages, these bundles voice minutes, SMSes and data for a single price. But there are one or two catches. (More on that in the coming weeks).
8.ta’s contracts are also fairly simple. There are bundled minutes (although these are split into on-network minutes and minutes for calls to other numbers), and a relatively small amount of bundled data included on each.
Crucially, you need to get an idea of what your call rate is out-of-bundle. This is likely where you’re going to end up paying more than you should. It is insanity in 2012 to pick a contract where you’re going to end up being billed at a rate of (or equivalent to) R2.85 per minute in peak times. Literally every other available option is cheaper.
Finally, do everything possible to get off a “per minute” contract if you’re on one (even if it bills per second after the first minute)! Per minute billing is a trick invented by operators over a decade ago to force you to pay far more for calls than you should be.
To get the most value for your money, and if you send lots of SMSes or find yourself using more and more data, add bundles. The major benefit here is that you’re not tied down for longer than a month. You can add bundles, switch between different ones, or cancel them month-by-month (they’ll auto-renew until you deactivate them). Choosing the right bundles will save you money.
(For an extra R40 a month, I upgraded to a 500MB data bundle last month and ended up saving over R100 on the extra data I had been using beyond the 300MB bundle which was billed at out-of-bundle rates.)
You might find yourself on a contract which comes bundled with SMSes and data (like Vodacom’s Smart Plans or Cell C’s Straight Up packages), but often this is not enough. There is likely not enough bundled data, and adding an extra bundle will make a big difference to your monthly spend.
Face it, nearly all of us choose the phone first. If we’re forced to move to another (more pricey) contract, we do. Or else we pay in to get the phone we want. Take time and compare the offers in the market. Vodacom, Cell C and 8.ta all have specials available on a monthly basis, while MTN runs fortnightly deals. Often you’ll find the same phones available on similar packages across networks. (More on this next week where I’ll contrast some of the different offers available).
Top-up, top-up, top-up!
Finally, if you’re a low to mid-level user who wants to control your spending and avoid billing surprises, switch to a top-up contract. These hybrids offer the best of both contracts and prepaid. You get your subsidised phone, and you can (more often than not) take advantage of special prepaid offers.
Arguably the single best benefit of having a top-up contract is being able to buy ad-hoc SMSes and data bundles. There’s no simple way of doing this on contract. With a top-up contract, you load prepaid airtime on your phone and buy a bundle by dialing whatever short code you need to.
It’s no surprise then that these contracts are becoming very popular. Mobility 2012 research from World Wide Worx published recently shows top-up contracts growing from 5% of the market to 9% over 18 months.
*Hilton Tarrant contributes to “Broadband”, a column on Moneyweb covering the ICT sector in South Africa.