Because the alternative means telling people they have to cough up R2000+ for the phone or router. How many people do you think will sign up then?
I would cough up R2000 for the device upfront because it means the following important things:
1. I can leave when I wish, and ONSELL the device to another victim, er, customer.
2. There will be a market for 2nd hand devices, since not every customer is forced to buy a new device on-contract from Neotel. They can either buy the device 2nd hand, or buy a new one from Neotel cash upfront, or pay it off on contract (with the pro rate bail-out option).
3. It creates a market for other branded, standards-based devices. They can't sell it for less than R2000? Fine, CheapTech from Taiwan will clone it for R200.
Simple, innit? But Neotel don't get it. As it is, they have a stupid product offering so they either do not have a clue about how to position their product in the market, or are technically unable to deliver the right products.
Case in point: I've just moved to a new home which has no landline. The Neotel coverage app says that I've got 100% coverage. My needs are: home phone line + internet to share among 4 people with scalable bandwidth and an option to buy about 10GB upfront at a decent per gig rate. They can't help me because of the fatal flaws in their product range:
N(e)oConnect: no simultaneous voice & data? I have to dedicate a pc with USB connection to share internet over WiFi? FAIL.
N(e)oFlex: no voice? FAIL.
Another thing: how come they charge R80 for additional bandwidth when Telkom only charges R65? Are they buying it from Telkom at full retail price or what?
Maybe by "next generation network" they mean something like what Virgin Mobile delivered: a "virtual" telco running on someone else's infrastructure.
Against every fibre in my being I am yet again being forced to go with Telkom. I don't think my needs are that unique and I'm quite sure many people are being turned away by N(e)otel's unbelievably inept product offering.