Cellphone call prices plummet
Communications Minister Siphiwe Nyanda got the “big early Christmas and Easter present” he wanted: “cheaper calls” for South Africans.
But for how long?
Did Nyanda and his department even realise that we’ve received “Christmas presents” from the mobile operators every single festive season? MTN, Vodacom and Cell C launch aggressive promotions every December, and this year it’s no different.
In his speech announcing the drop in interconnection rates (a massive red herring if ever there was one) Nyanda said he was “glad to report to the House that mobile operators have committed to introduce new and affordable retail products based on their reduced rates from December 1 2009”.
It’s D-Day.
Will there be any “new and affordable retail products” announced today? Doubtful. His “agreement” with mobile operators was reached barely two-and-a-half weeks ago.
How long does the Department of Communications think it takes massive companies like MTN and Vodacom to whip up new products and pricing? Two weeks? Let’s throw in some quick TV and radio adverts too. (Those won’t take long to make. Plus let’s simply book extra airtime at short notice…)
There have been announcements though. Vodacom this weekend said it will cut Vodacom-to-Vodacom peak call rates by 15% during the month of December. But, the promotion excludes Per Second Plus and any inclusive voice bundle minutes.
This offer, from South Africa’s largest operator, comes a fortnight after Virgin Mobile slashed its call prices with a new product: “99er”.
The company says that “the 99er’s rate of 99c per minute, all day, every day, to all networks after the first five minutes of calls per day at R1.99 per minute, pre-empts the drop in the peak interconnect rate expected in February 2010. This is a reduction of over 32% on Virgin Mobile’s current prepaid tariff.”
Ballsy stuff. But, when you’ve got a couple of hundred thousand subscribers and have changed business models more often than most people change their underwear, you can afford to take big gambles.
Cell C also jumped on the interconnect “bandwagon” with a new tariff plan: Easy Chat All Day. This is R1.50 per minute, available across all of Cell C’s package deals (including Hola 7, Winc and Gospel Life).
“The new R1-50 flat rate is our gift to the South African market and another victory for consumers,” said Cell C CEO Lars P Reichelt.
“Not only is it an unbeatable offering in monetary terms, but it takes away the complexity of cellphone billing as the only thing subscribers need to remember is ‘R1.50 per minute’.”
Subscribers on this package will also pay a 50c flat rate for SMSes. What Cell C’s marketing gurus don’t tell you is that at this flat rate, consumers are forced to pay 25c per minute more during off-peak times. Great win for users who call during peak times, but not a good deal for those who call after hours.
MTN pre-empted all of this, and hardly received kudos for its promotion offering (up to) 100% discounts on calls for 100 days.
The promotion is an extension of the MTN Zone concept, which had offered discounts of up to 95%. The discounts are not only restricted to calls, but are extended to SMSes as well.
So, substantial discounts from all the mobile operators. Same story as every year.
But, if pressed, you can bet that the operators will use these discounts to somehow calculate a lower effective retail price charged to subscribers (in the same way they’ve invented “blended interconnect”).
And they’ll no doubt explain how these promotions were not planned three months ago, but rather the result of “negotiations” with the minister.
Nyanda needs to realise he’s been duped. There is nothing new about these “Christmas presents”.
A drop in interconnect charges in February (or March if you’re MTN) could never have translated into a decrease in retail tariffs now (why would anyone surrender revenue early?).
Not now, not next year.
Interconnect charges and retail tariffs are not linked.
It’s going to be interesting to see what illusions the operators conjure up after interconnect charges drop in the first quarter of 2010.
Cellphone call rates – discussion
*Hilton Tarrant contributes to “Broadband”, a column on Moneyweb covering the ICT sector in South Africa. Why the Department of Communications pursued interconnect tariffs in the first place is beyond me.
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