Poorest cellphone users pay the most to chat

What would be the most sustainable contribution local telcos can make to the poor?

  • Building schools

    Votes: 3 8.1%

  • Building roads

    Votes: 0 0.0%

  • Cutting telecom prices across the board

    Votes: 32 86.5%

  • Putting up Internet cafes in rural areas

    Votes: 2 5.4%

  • Unsure

    Votes: 0 0.0%
  • Total voters
    37
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Debbie

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http://www.suntimes.co.za/articles/article.aspx?ID=ST6A209194

SOUTH Africa’s poorest cellphone users are forking out the most to chat on the country’s biggest networks.

And, for the second year running, an international telecoms cost survey has found South Africa to have the most expensive cellphone call rates in the world.
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In Australia a three minute domestic call during peak time costs R1.50. The same call in SA costs R5.24.
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The country’s three cellphone operators make about R40-billion in profit a year.
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Naidoo said people on low incomes use their cellphones for convenience, spending about R100 a month on airtime, but getting “fairly little use of their phone”. [Try telling Vodacom CEO Alan Knott-Craig that. According to him, if someone merely has an active SIM card, it means that call costs are affordable to that person.]
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Spokesman for the Independent Communications Authority of SA (Icasa), Jubie Matlou, said the high costs were the result of cellphone operators setting their own prices. [More pearls of wisdom from ICASA.]
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Absolutely disgusting. I have lost all respect for anything that ICASA says now (cos let's face it they don't do anything). It's sick how people in the low income bracket have to spend more on cellphone usage than they do on commodities such as bread.
 
WHAT KIND OF CELLPHONE SPENDER ARE YOU?

The following table is done as follows:

Group name - Number of users - Average Monthly Spending - Share of Profit - Have bank accounts

Grassroots: 13 million - R109 - R9.6bn - 52%
Lizards: 2 million - R113 - R1.6bn - 53%
Playas: 7 million - R161 - R7.6bn - 74%
Magpies: 800 000 - R158 - R1.2bn - 57%
Sophisticats: 3 million - R284 - R6.4bn - 96%
Elephants: 2.5 million - R729 - R13.2bn - 99%

Earnings:

Grassroots, Lizards, Playas and Magpies: Majority under R1000

Sophisticats: Between R1000 and R5000

Elephants: Above R5000

Description


  • Grassroots: Rural, low-income, least educated
  • Lizards: Small town, low-income and minimal education
  • Playas: Semi-urban youth
  • Magpies: Urban, young students
  • Sophisticats: Upper middle management level
  • Elephants: Older users in upper management positions
 
So what do you suggest they do to fix this scales of economy ? Rich subsidising the poor ? You get special pay as you go rates if you earn under a certain amount ? The Bussiness model in use everywere is that PAYG costs more than contract to call on, its a sound bussiness plan the people that dont pay contract fees pay slightly more than PAYG or everyone would use PAYG. Networks also need to have a stable income and rely on the contract subscribers to do that for them, so their focus is to get as many people signed into a binding contract as they can. Even if they drop the call rates across the board PAYG users still pay more than contract subscribers. In my opinion though cellular telephony started a mobile solution for people on the go and thats excatly what it should be use a land line for most your calls and the cell when you out. You pay a premium for being mobile. The reason poor folks here have to resort to cell phones is because of telkoms and the governments incompotence. If telkom pulled there side and provided cost effective telecoms and had penetration into poorer areas we would not even be concerned by stuff like this. The cell operators saw a gap in the market and took it providing cheap phones and starter packs so the poor could at least be connected they did more than telkom and the government those people have a means of telephonic communication. Even if the move by the cell operators was a financial one.

I agree that the cell operators can drop the price of calls but look at it from a bussiness point of view, its supply and demand they have a product we want and we willing to pay for it. If there was no demand they would have to create one making it more attractive to have a mobile phone by dropping prices.
Telkom and the government created the perfect market for them and they didnt waste time turning into a thriving bussiness. People say they the devil, they just a corparation with shareholders to please, partners that have part control of them and people to answer to.
Heres an example, I have a product you want to buy its not an essensial but you want it, you cant afford it and start complaining about how expensive it is I'm not going to budge on price because I know someone else will buy it.
Point being basic telecoms is not the cell providers job, but they got communication to the poor. Better than having nothing and more than the telkom and the government could do.
 
@Gunny: 40 Billion Rand Profit annually? I think they can afford to drop their tarrifs across the board.
 
Gunny said:
I totally agree

But...

If you had a bussiness making a good profit would you drop your profit margin ?
Click to expand...

Not unless I was forced to lower my tariffs by my regulator or my competitors. But I, like the others, just laugh all the way to the bank every time my regulator opens their mouth, and, well, there's no competition between me and my "competitors" - we don't want a price war and we don't need MNP to create one either.

Basically what I'm trying to say is: unless I am forced by a regulator or competitors, I will maximise my profits as much as possible. Because we're in an oligopoly, we're pretty happy with the status quo, as we're guaranteed as little possible competition and our regulatory body is toothless and quite possibly in our back pocket.
 
jontyB said:
Not unless I was forced to lower my tariffs by my regulator or my competitors. But I, like the others, just laugh all the way to the bank every time my regulator opens their mouth, and, well, there's no competition between me and my "competitors" - we don't want a price war and we don't need MNP to create one either.

Basically what I'm trying to say is: unless I am forced by a regulator or competitors, I will maximise my profits as much as possible. Because we're in an oligopoly, we're pretty happy with the status quo, as we're guaranteed as little possible competition and our regulatory body is toothless and quite possibly in our back pocket.
Click to expand...

wise words :D
 
Its not an essential service, yet people believe its their right to have cheap cellphone rates. Thats not what it is. If you can afford it you get the privaledge of using it.If people find it so expensive stop using it. Truth is most people that have cellphones now actually could be using a cheap phone and PAYG and only make emergancy calls from it. Think about that its true. Then you get people like me my cell phone is my business without it I wouldnt make money so it pays for itself. If I was Office based I'd have a cell on PAYG so if I get stuck on the way home or need to find out if I need to pick something up for dinner I can make a quick call. My dad uses R55.00 airtime for 2 months. My bill is R2500 a month but its covered by my bussiness every call I get or make has the potential to make me money. I'm on the road all day and need to be contactable. It doesnt have to be expensive you can manage it and make it justifiable. Can you justify your bill. Anyway its become human nature to have the latest and greatest so people sign up for contracts to get the latest phones with 60% of features they will never use but its cool to have. Then you sit and complain about the money you spend every month because on contract you not as aware of you usage because you dont have to worry about not having airtime, and the cell operators love you for that. If everyone managed their spending properly we could cut operators profits and they would have to do something about it like dropping call rates to get more people calling again. I just saw a classic example of why telecoms is making so much money my brother just spen 25 min on a call to a friend 3 houses away. He could have called to find out if he was home and then walked over and had the convo. Think twice before making calls and signing contracts are you signing the contract to get the latest phone or because you need it.

Users are the market without us they cant survive so lets squeeze them.
My guess is it wont happen, people will complain but not realise they can do something about it.

To make a fair comparison look at a few countrys like Australia, US and UK and compare the price difference per minute between fixed line an cell costs then check what the difference is here.People in the US arent half as reliant as we are on cellphones.
Our whole telecom market needs to be shaken up and the only way to do that is to deregulate it and bring in competitors we could do with an extra 2 major fixed line operators and 2 more major cell operators not like VM but someone with money that will build their own network.
 
Gunny: agreed.

One unique problem though is that other countries have an established and well utilised fixed line telecoms system in place. Market penetration alone for cellular based services shows that South Africa is very unique with its telecoms problems.
 
Jonty thats why in my first post I made the comment that government and telkom made the market such a honey pot for cell operators. They capitilising on ineptitude.
 
Gunny said:
Jonty thats why in my first post I made the comment that government and telkom made the market such a honey pot for cell operators. They capitilising on ineptitude.
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and making the honeypot all that much sweeter by keeping ICASA toothless.
 
ICASA is made up of friends of Government officials who they cant get into cabnet. They get payed huge salaries and the public have no say in who represents the in ICASA they would like us to believe that we can we all know government has the final say. Thats my opinion anyway. We inadvertantly pay there salaries aswell I think Debbie will know where there funding comes from but I'm pretty sure Joe Public foots the bill.
 
jontyB said:
Market penetration alone for cellular based services shows that South Africa is very unique with its telecoms problems.
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S.A is not unique in this regard ... all over Africa and other developing countries you will find a huge uptake in cellular due to the lack of or a decaying fixed line infrastructure.

Motorola has won a tender for building a GSM handset that is going to cost less than $40 wholesale.
 
tibby.dude said:
S.A is not unique in this regard ... all over Africa and other developing countries you will find a huge uptake in cellular due to the lack of or a decaying fixed line infrastructure.

Motorola has won a tender for building a GSM handset that is going to cost less than $40 wholesale.
Click to expand...
$40 is a lot - Someone @ Vodacom told me that the Nokia 1100 costs around $30 - which is why it is so cheap on PAYG here.
 
So about R300 wholesale thats not that cheap for R400 you can pick up a decent cell and starter pack. Its gonne be 300 + shipping + vat + distribution + profit so R900 in South africa
 
jontyB said:
$40 is a lot - Someone @ Vodacom told me that the Nokia 1100 costs around $30 - which is why it is so cheap on PAYG here.
Click to expand...

Texas Instruments says it will soon start supplying mobile phone producers with a single chip that powers an entire entry-level handset, saying those GSM handsets might sell for only a little more than $20.

"We're ramping very soon, targeting the $25 and low $20 price range (for handsets that contain the chip)," TI's chief of wireless chips, Gilles Delfassy, told Reuters on Tuesday at the 3GSM World Conference, the wireless trade show under way this week in Barcelona, Spain.

"We will ship millions in '06, hopefully tens of millions," Delfassy said in an interview.

The cheapest phones at the moment, contain a set of two chips from TI and cost just under $30. Integrating all the functionality in a single chip cuts the price.

http://news.zdnet.com/2100-1035_22-6039461.html
 
tibby.dude said:
Texas Instruments says it will soon start supplying mobile phone producers with a single chip that powers an entire entry-level handset, saying those GSM handsets might sell for only a little more than $20.

"We're ramping very soon, targeting the $25 and low $20 price range (for handsets that contain the chip)," TI's chief of wireless chips, Gilles Delfassy, told Reuters on Tuesday at the 3GSM World Conference, the wireless trade show under way this week in Barcelona, Spain.

"We will ship millions in '06, hopefully tens of millions," Delfassy said in an interview.

The cheapest phones at the moment, contain a set of two chips from TI and cost just under $30. Integrating all the functionality in a single chip cuts the price.

http://news.zdnet.com/2100-1035_22-6039461.html
Click to expand...

@tibby: I'm assuming that Vodacom probably get some kind of dicsount from Nokia then....
 
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