The true cost of mobile data

How much do you think it costs to provide 1MB of mobile data (all costs included)?

  • More than 15c per MB

    Votes: 2 1.5%

  • 10c to 15c per MB

    Votes: 2 1.5%

  • 5c to 10c per MB

    Votes: 25 18.5%

  • 3c to 5c per MB

    Votes: 34 25.2%

  • Under 3c per MB

    Votes: 72 53.3%
  • Total voters
    135
ColdComfort said:
So.....charge 3-5c per mb then or did he not expect to be quoted for saying they are overcharging for data, and I am not talking about the new GigaNite bundle.
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There's this little thing called profits that companies do. It generally links to their value which a CEO wants to keep up if he likes his job and doesn't want to get lynched by a mob of shareholders. Also, you're forgetting funds required for advertising, expansion and research and development.
 
So if the cost is 3c and Vodacom charges R2 per MB, then the margin is 6666%? :confused: Even worse, if they claim the cost is 10c then their margin is 2000% Thats more profitable than human trafficking and the arms trade industry. This is a sad day for the South African consumer.
 
Depending on which overheads are included it could be anything from 2c to 10c ....

Top heavy operators with huge advertising, sponsorship and marketing budgets to the top end and lean, mean operators at the bottom end.
 
Add in the true cost of SMS, combined with the number of the damned things sent, and you'll find that Croesus would blush.
 
what's the point of a poll like this when most people voting have absolutely no idea what is a realistic estimate and can't make an informed decision? Sure, it's like democracy and that still happens, but it's just poplulism.
 
Vlad said:
what's the point of a poll like this when most people voting have absolutely no idea what is a realistic estimate and can't make an informed decision? Sure, it's like democracy and that still happens, but it's just poplulism.
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Peoples opinion(s). Now shoosh
 
whatever the correct number is, most people just want a fair price.
Of course the operators need to make profit, its a business like any other. there must be a whole bunch of expenses involved in making a Mb available other than just the towers, and other hardware in the systems. Like been said, marketing, advertising, human resources, etc etc etc.
Still... like with any other industry, and government, it does leave a vrot taste to see prices that seem too high, and also seeing fat profits, and huge bonuses to the top management.
guess we have to agree, like in any other business, sometimes the fat profits can be due to good and smart management, so the big bonuses can be justified. These guys need proper remuneration too, or they will exit. I'm not an insider, so i dunno.
at the end of the day, competition is the best thing for consumer value... companies are free to charge whatever they like, and the consumer is free to join whoever they want. eventually somebody with unfavourable pricing will have to adjust.

in my opinion the companies can also pipe down a tad on advertising ... if somebody doesn't know VC or MTN by now they must be living under a rock, so some (huge I guess) expenses can be allocated somewhere else, instead of doing advertising purely for the sake of advertising. Would also make for less irritating radio & tv :-)
 
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CeeBee said:
in my opinion the companies can also pipe down a tad on advertising...
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They advertise EVERYWHERE and advertising is not cheap...

Looking at CellCs new "R12 per GB" afterhours (nothing sells at a loss) you're looks at something like 1c a MB..
 
eltherza said:
They advertise EVERYWHERE and advertising is not cheap...

Looking at CellCs new "R12 per GB" afterhours (nothing sells at a loss) you're looks at something like 1c a MB..
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This might be below their profit margin though. 1c a MB is better than 0c a MB. The networks still run and they still pay for their international bandwidth and blah blah, unless they get charged different rates depending on the time of day as well, but I doubt we'll ever get a truthful answer on how much those connections cost them.
 
This whole debate is based on a fundamental misunderstanding of how these costs are arrived at. Ironically, that same misunderstanding is pervasive, even amongst the people within these companies whose job it is to set pricing.

With a few seconds thought, it should be obvious that the cost of data is not a sensible measure at all, and that, at best, one could arrive at an approximate number at a particular time, for a particular network. The real cost is the capital investment in infrastructure. How much each user has to pay in order to pay off this infrastructure depends entirely on how many users there are, or, put another way, how big a bet the company is prepared to take on how many users they will have.

Hence, for a current network, there may be some current average cost for data - take the total capacity of the network in bits per second (every channel, on every site), work out how much revenue is needed per second to pay off the infrastructure, adding overheads etc, and divide the one by the other. This number is likely to be very low, but it's a largely meaningless average.

The problem, of course, is that a) no network is even close to capacity everywhere - though obviously some sites are heavily loaded at peak time; and b) the users simply won't behave and spread themselves out geographically and over time - day and night - to fill the network up properly. In reality, the network is built to try to cope with the peak demand per site. Also, mobile networks need lots and lots of coverage that is largely wasted from a capacity point of view, and yet costs much the same to build. Hence, whilst the average may be low, the real cost of the infrastructure per bit is much higher than the theoretical average.

This whole argument hinges on the ability of the operator to fill the available capacity - even taking into account the issues above. If you are actually building a network, it starts off empty, and the whole calculation is based purely on a forecast of what you think you can get - that's the bet they are taking. Hence, Cell C has taken a massive bet on getting more subscribers at lower ARPUs, despite the fact that the cost per bit on their network - the network not being as large as Vodacom's or MTN's - is probably much higher, because of the effect of shared costs and overheads. If they lose the bet, being profitable is going to be more difficult for them than for the larger networks. 8.ta has an even bigger problem, given their position in the market, but they are making up for it by cross-subsidising from Telkom's coffers.
 
You're also neglecting the effect of loss-leaders - desirable products, provided at lower than cost, in order to attract new customers for more lucrative products (eg SMS and voice)
 
A great post by ads. I think we should ad that the mobile operators can offset some of the data costs when you consider that they also build networks for voice. Same sites (tower), and potentially the same base station.
 
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