Mobile broadband pricing: how low can it go?
Cell C stunned the mobile broadband market in September 2010 when the company launched data bundles priced at R999 for 24Gb and R1,999 for 60GB.
Cell C’s promotional data offering dropped the price of mobile data from the usual 20c per MB from Vodacom and MTN to just over 3c per MB – a move which was widely welcomed by consumers and industry players.
Cell C’s current prepaid data offerings are however only launch promotions, and the sustainability of Cell C’s mobile data prices have been questioned by their competitors.
Speaking at the sixth annual IIR Broadband Summit, Cell C CEO Lars Reichelt said that while he can not guarantee the long term availability of this pricing, their launch offering will be available for some time to come and that they are very happy with the uptake so far.
According to Reichelt they are currently the second largest seller of mobile broadband dongles in the country, and that they are not too far away from taking the lead.
While Reichelt would not be drawn into a discussion about the profitability – and hence sustainability – of their promotional data pricing, the Cell C CEO did say that ‘they are happy’ when it comes to financial matters. Reichelt added that ‘they will see’ about pricing when this promotional offer comes to an end.
How low can mobile prices go?
ECN CEO John Holdsworth asked the question on many consumers’ lips: Are Vodacom, MTN and 8ta profiteering from high data prices, and what is the real cost of a MB of data?
Vodacom’s Jannie van Zyl said that Cell C’s current promotional offering is indeed very compelling, but not sustainable in the long term. Van Zyl highlighted the fact that Cell C’s standard data bundle pricing is far closer to Vodacom and MTN pricing than their promotional prepaid offering.
Van Zyl said that consumers can expect price reductions of a few cents per MB in the short term, but predicted that prices will not fall to below 10c per MB in the foreseeable future.
8ta’s Zoltan Miklos concurred with van Zyl, saying that a price of 3c or 5c per MB is simply not sustainable for 8ta. Miklos said that they need to recover the costs of rolling out a mobile broadband network, which makes very low mobile data prices infeasible.
None of the mobile broadband operators would however divulge the actual cost of delivering a MB of data to their subscribers, which means that speculation of profiteering may well continue, especially with Cell C still selling data as a fraction of the price of their competitors.
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