99 cents? Now that’s real value
THE battle lines for SA’s lucrative pre-paid cellphone market have been drawn.
Yesterday, Vodacom and Cell C pre-paid customers were able to switch their call plans to the lowest rates ever after both companies announced packages that allow people to make local calls to any network, at any time of the day, for 99c a minute.
The move has been hailed as a step in the right direction for SA’s pre-paid consumers, who have for years paid among the world’s highest fees for cellphone calls.
A recent report by Research ICT Africa highlighted the issue, revealing that pre-paid mobile prices were cheaper in more than 30 other African countries than they were in SA.
In a move that industry watchers believe will trigger a wave of price cuts, Cell C last week introduced its “99 cents for real” tariff – slashing its rates by 34 percent.
Vodacom followed suit minutes later with its “Freedom 99” plan.
According to industry experts, however, Cell C’s pre-paid plan is the cheaper of the two as customers are billed per second from the first second, while Vodacom charges customers 99c for the first minute, and then in 30-second increments thereafter.
However, Vodacom offers customers free Vodacom-to-Vodacom calls from midnight to 5am if they recharge with at least R12 on the day. Vodacom said yesterday that its deal would end on July 31.
MTN, the other major player in the market, did not rush out to slash its rates, saying that it’s pre-paid tariffs “remain the most affordable in the market”.
Arthur Goldstuck, of technology and telecommunications research company World Wide Worx, said that the changes addressed the biggest issue of pre-paid customers – call costs.
“It is the lowest income earners who are on pre-paid and when you look at it that way, SA’s pre-paid cellphone costs were very high,” Goldstuck said. “The reality of it is that the poorest people were paying the highest for cellphone calls and the price cuts go a long way towards changing that.”
Goldstuck said that despite this move, South Africans still paid more for calls than cellphone users in Western countries.
According to the Research ICT Africa report, SA’s prepaid rates were also 360 percent more expensive than those of its neighbour, Namibia.
On the continent, SA was placed 32nd out of 46 countries that were surveyed. Mauritius, Ethiopia and Namibia offered the cheapest cellphone call rates.
The main reason for this was SA’s mobile termination rates (MTRs) – the fees charged by cellphone companies to handle calls from other providers, the report stated.
The Independent Communications Authority of SA has reduced MTR fees over the past three years from a high of R1,25 per minute in 2009 to 56c per minute this year. The fee will be reduced further to 40c per minute next year.
Dr Christoph Stork, a senior researcher at ICT Africa who was part of the team that researched pre-paid prices in Africa, said that SA call rates still fell behind those in Namibia.
“Generally, in Namibia one can call to any network for 38 SA cents per minute. Vodacom and Cell C would probably make more money by cutting rates even further,” Stork said.
He said MTN faced losing customers if it did not reduce its rates.