New mobile call termination rates: expect operator backlash

I was having a good day....

it is a promising initiative from Icasa to lower telecommunication costs for the South African Public
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Then...

he expects Vodacom and MTN to challenge the rate cuts because it will have a significant impact on their bottom-line.
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And a big bottom it is.:( The shareholder wins again.
 
siraman said:
I was having a good day....



Then...



And a big bottom it is.:( The shareholder wins again.
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Exactly as it should. The shareholders own the company.
You as a customer are welcome to take your business elsewhere if you don't like it though...
 
JStrike said:
Exactly as it should. The shareholders own the company.
You as a customer are welcome to take your business elsewhere if you don't like it though...
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And that's exactly what I did and still do with any other commodity and happy with it,was just stating the obvious.:whistle:
 
JStrike said:
Exactly as it should. The shareholders own the company.
You as a customer are welcome to take your business elsewhere if you don't like it though...
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Except it's a slightly more complex problem. MTN and Vodacom were given a 10 year head start to build their network infrastructure and client base, that makes a significant difference. The scales do need to be balanced somewhat...
 
Mike Hoxbig said:
MTN and Vodacom were given a 10 year head start to build their network infrastructure and client base,
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Precisely and my gripe re: these two companies and their harmful monopolistic practices over the years(yeah probably will now get the network capex investment argument blah blah blah..) and not exactly easy for the rest of the populace to take their business elsewhere.I'm somewhat lucky in terms of network coverage from all 4 operators but many not so and admitedly ~R2.85/min vs 0.99/0.95c/min would make a big difference economically both for the poor and middle class.

Elsewhere is not an option.:sick:
 
He said that the lower call cost does mean that new players pay the incumbents less, but it also means that their call rates margin will reap lower profits.
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I don't see this as a problem as it will nicely balance in the favour of the smaller operator.
You pay me less and I pay you much much more less. So I end up with more.
 
LPCPT said:
I don't see this as a problem as it will nicely balance in the favour of the smaller operator.
You pay me less and I pay you much much more less. So I end up with more.
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"You pay me less "
This part is where the problem is.. New entrants inbound revenue is very limited as the volumes are extremely low compared to what you pay out to MNOs. Most new entrants (not referring to TM or CellC) cellular termination equates to approximately 60% ~ 70% of the airtime turnover. Inbound revenues are at 12c. This is not sufficient income to expand and maintain a next generation network. Most new entrants consider this income as a monthly 'bonus' and plough it straight back into network maintenance and expansion.

New entrants has to also sell at lower prices in order to entice new clients to join.
If new entrants are paying MNOs 10c and selling retail at 99c, then it surely will make a difference as the income will boost the growth of the network and technology, however, this is unlikely as the consumer will expect lower call rates. I'm estimating retail mobile call rates from entrants will drop down to 29c ~ 39c.

This brings the new entrants income right back to where it currently is.

Is it documented that people do not 'call more' because the call rates are cheaper.

As much as new entrants are gladiators for lower call rates and wish to bring lower prices to the consumer, it has to balance its business decisions to ensure that their network is at optimum to be able to provide the good quality required and cater for the growth. This can be done only if the company is profitable..

Challenging times ahead indeed.
 
mo_to said:
Is it documented that people do not 'call more' because the call rates are cheaper.
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I disagree.. the statement is more or less true BUT people will call more on cell vs land line if it were cheaper to do so. Basically the statement is too broad as it covers all communication.. there are infact three types.. voip, mobile and land line.. i make on avg x number of calls a month. deciding factor wrt using my cellphone or work/home land line is purely cost of the call from cell. if cell was sufficiently cheaper i'd not need a land line but this is not the case so i make the majority of calls via land lines and small minority from cell only to cell numbers interms of minutes used.

which is why my top up contract is almost always sitting at 400-500% of the monthly value. So e.g. when i broke down, had to arrange towing, mechanic, getting insurance details etc.. all those calls came to like 50-75 bucks.. not bad considering it was 5-6 calls some of which was lengthy. land line usage is like hrs vs minutes on cell.''

Another e.g. would be when i move apartments early next yr again, typically with cell usage i'd go through R300-350 and not speak for 1/2 the number of minutes i'd normally with family in cpt via a cell bill. There was a point where i was considering not getting a land line but cost wise it makes no sense as it works out costly
 
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krycor said:
I disagree.. the statement is more or less true BUT people will call more on cell vs land line if it were cheaper to do so.
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Personally, I agree with you, as my dialing habits would follow along the same lines as you've stated above. However, my statement was based on the fact that statistically, operators (particularly new entrants) have not experience a higher call volume because the interconnect rate dropped.

Unfortunately, we cannot base statistics on yours and my personal experience. We need to look at what statistics and habits the market has generated, and comment based on that. It may differ as the average includes enterprise, public and personal calls.

For the future, the mobile call rate will be lower than fixed line, but this will not entice businesses to deploy cellular infrastructure so their clients can reach them at 2c lower call rate. Enterprise will predominantly still use a reliable fixed line service, and you will have to think less on whether to call someone on their mobile or fixed line since the costs are almost same :)
 
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