2005-06-03/'Free' Handsets Cost Cellphone Buyers Plenty

(Johannesburg)

June 3, 2005
Posted to the web June 3, 2005

Lesley Stones
Johannesburg

DEALS giving cellphone users sophisticated free handsets when they sign long-term contracts may be vetoed to protect consumer interests.

Scrapping handset subsidies would force consumers to pay for handsets, costing from R400 to R4000. But monthly call charges would fall, as contract fees are inflated so the networks recoup the cost of a "free" handset over time.
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See also: [post=218683]ICASA - How handset subsidies should be regulated[/post]

yeah i read this in the paper the other day. Wonder if its a good thing ??

ARPU (average revenue per unit) to the cellco's for contract users is staggeringly higher than that for prepaid

Why not offer consumers two options: One with a cellphone and one without? Leave it to the market to sort out and not to the regulators.

Then it is up to the client to make his choice.

As employer I love the included cellphones: Part of the employment contract is a cellphone allowance on condition that the employee has to upgrade to a "state of the package" phone whenever he can. Decent cellphones are part of the company image.

This will become much more difficult if this is no longer allowed.

Anything that brings down the cost of cellphone calls is good. In this case I think its definitely good. I don't want my cell calls costing the earth just so every Tom, Dik and Harry can have the latest cell phone gadget with camera, mp3 player, juke box, internet, wifi, skype, mmc, hair clippers, spare tyre, etc...

Edit: Just let me get my 6680 before they do it

100% correct , let the market decide, free market economy should prevail.

My POV is that consumers must be the ones to decide which is best for them, ATM we only have one choice to make: 24 month Post-Paid (i.e. a lengthly contract - even if you buy your own phone upfront, or use an old phone), OR Pre-Paid which is hellishly expensive if you intend to make any calls whatsoever.

My feeling is that month-2-month Post-Paid contracts without a contract/free phone, should be enforced by ICASA, as an additional option for consumers to choose from, I also feel that shorter than 24 month contracts should be allowed [3, 6, 9, 12 months etc] if consumers want a partially-"subsidised" phone, i.e. the consumer pays some cash upfront to cover the unsubsidised cost of the phone...

Basically I want ICASA to give consumers more freedom to choose what suites consumers better, and if someone really doesn't mind a 24 month contract, then let them choose a 24 month contract.

[post=215077]My other comments here...[/post]

Is anyone going to submit anything to ICASA?

It'll never get passed through.

Scrapping handset subsidies would see the sales of cellphones plummet because the networks would no longer be buying them - it's obvious to anyone that the networks are the biggest market for the likes of Nokia, Samsung, Motorolla etc.

Sure glad I actually own my phone and never got a contract - pay as you go hasn't let me down yet and it saves me a small fortune.

I may only have a 3310, but hey - it's a mobile phone - an unfortunate neccessity these days, allowing people to pester you whenever they want.

bb_matt said:

I may only have a 3310, but hey - it's a mobile phone - an unfortunate neccessity these days, allowing people to pester you whenever they want.

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My phone has that most ingenious feature that stops people getting hold of me - the on/off switch.

Seriously though, the consumer should be given the choice. Personally, I'm looking forward to my next "upgrade" - it's the only way I can afford the phone I want.

ic said:

My POV is that consumers must be the ones to decide which is best for them, ATM we only have one choice to make: 24 month Post-Paid
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CellC already allows consumers to choose between 1, 12 or 24 month contracts on most of their packages... so what is stopping the consumers deciding already?

Persaonlly, I like having my new R3.5k phone, and paying it off over 2 years. Even adding up everything I am paying, I am still paying less per month (excluding calls) then I would be if I was paying it off seperatly.

WarpedShadow said:

CellC already allows consumers to choose between 1, 12 or 24 month contracts on most of their packages... so what is stopping the consumers deciding already?

Persaonlly, I like having my new R3.5k phone, and paying it off over 2 years. Even adding up everything I am paying, I am still paying less per month (excluding calls) then I would be if I was paying it off seperatly.

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Hardly a choice IMO - all the networks should be offering shorter term contracts. Overseas you get a new phone - latest models - annually and not biennially.

I had a blackberry I wanted to play around with and you need a contract package to use it. At the time the only option was to take out a 24 month contract (Vodacom's Messenger was the cheapest at r35 per month - there was no phone offered so why insist on 24 months?

So how new is your new r3.5k phone looking after 18 months - by 24 months your gagging for some newer technology and sign off on another 24 month contract perpetuating the cycle.

WarpedShadow said:

CellC already allows consumers to choose between 1, 12 or 24 month contracts on most of their packages... so what is stopping the consumers deciding already?
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To further clarify my POV, I want consumers to have as much choice available to them as possible, I am not saying that ICASA should order Cellular Network Operators and Service Providers to drop 24 month contracts and cellery phone subsidies, instead consumers that are willing to partially or fully subsidise their own phones or use an existing phone with a post-paid contract, should get cheaper calls & contracts - that would happen via market forces if ICASA mandates a minimum set of choices that all networks / service providers must offer to the public.

Now about CellC, yes they do offer shorter contract periods, not sure if one can partially subsidise a new phone on a 12 month CellC contract, or if you have to have an existing phone...

The fact that both Vodacom & MTN do not offer contracts shorter than 24 months, is a reflection IMO, that there is insufficient competition between network operators as well as service providers.

To summarise, ICASA should be able to mandate a minimum set of choices that are available to all consumers, that network operators and service providers are required to offer consumers, the additional choices should stimulate additional competition, which will result in consumers getting better deals if they make the right choices...