5c/MB still not realistic: Vodacom

The cost of providing a megabyte (MB) of mobile broadband data is still not below 10c, Vodacom‘s head of data and former iBurst CEO Jannie van Zyl told attendees of the MyBroadband conference on Wednesday (10 October 2012).

“If it is [below 10c/MB], we’ll buy all our bandwidth from Alan [Knott-Craig],” Van Zyl said.

Cell C CEO Alan Knott-Craig previously told MyBroadband that a fair guess at the cost price of mobile broadband is between 3c and 5c per megabyte (MB).

Knott-Craig conceded that he is not certain what the exact cost of mobile data is, but added that he would estimate the price at far lower than 10c per MB.

Former Vodacom CEO Pieter Uys previously said that it would take a very efficient mobile network to sustain mobile data prices of lower than 10c per MB.

Jannie van Zyl making the first LTE call
Jannie van Zyl making the first LTE call

Knott-Craig then later said that an optimised network, with the ability to make use of quiet times on the voice network to use for data traffic, can significantly lower the cost of providing mobile data services.

Jannie van Zyl, former iBurst CEO and current head of data at Vodacom, accurately predicted that Cell C would revert back to higher prices after their promotions ran out. Along with the prediction he also stated that offering mobile data between 3c and 7c per MB was compelling, but not sustainable in the long term.

Van Zyl said that consumers may see aggressively priced data promotions, but (again accurately) predicted that standard mobile data prices will not fall to below 10c per MB in the foreseeable future.

It is interesting to view the statements of these industry heavyweights in the context of today’s product offerings, where networks have data promotions running at below 10c/MB, but no standard pricing below this level. In fact, the cheapest standard data rate on Cell C is just under 15c/MB.

Posing a counter to the question of the real cost of mobile data in South Africa, Van Zyl asked that if it does cost 3-5 cents per MB and value to the customer is so paramount for the people making those statements, why are they selling it at such a massive markup?

“The reality is it’s not at those points,” Van Zyl said.

He went on to explain that it is a difficult thing to bring the price down all the time because they continually invest in the networks. “Typically over 50% of the cost of the network sits on the radio side and you just heard Shameel speak this morning: we put R7-billion into the radio network every year.”

It’s a balance between investing in the network, growing the network, rolling out new technologies, getting the capacity, controlling the costs and driving the costs down, Van Zyl said.

Despite this, mobile telecoms is one of the few industries where costs are going down, Van Zyl said, adding that Vodacom’s prices have been going down over the years.

“When we did the first MyBroadband conference we launched at that point in time 1GB of data for R600, today we sell it at R99,” Van Zyl said.

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5c/MB still not realistic: Vodacom