Cellphone users could eventually benefit from cheaper cellphone costs once the national regulatory body makes good on its promise to ensure the country's major cellular operators pass on to consumers some of their profits.
"Research has shown that South Africans pay far more for cellphone usage."
"We want to bring down costs. Research has shown that South Africans pay far more for cellphone usage than anywhere else in Africa or other parts of the world," said Sekgoela Sekgoela, the spokesperson for Independent Communications Authority of South Africa (Icasa).
He said details of its probe into the cellphone industry were published in the Government Gazette in January and Icasa was waiting until the end of March for responses from the industry before hosting hearings.
Incentives
"When you tell someone they are getting a free phone, it is usually not the case, because the person ends up paying for it," he said.
Consumers were offered gift vouchers, Sony Playstation and Microsoft Xbox consoles, and iPod players as incentives to take up new contracts or renew old ones.
Icasa wants to set up a licence-based structure to regulate the cost of connections between service providers; ensure there is a standard rate among service providers for the termination of calls; and introduce price transparency.
Vodacom has 59 percent of the market, MTN 31 percent, while Cell C and Virgin Mobile share the rest.
Sekgoela said Icasa was obliged, in terms of the Electronic Communications Act, to find out how consumers could benefit from cheaper call costs between different networks. "Our role is to stimulate competition and bring down the costs," he said.
Hanging up costs the caller
Customers are not charged for incoming calls, but a termination fee is levied on callers. This is less between callers on the same network.
Icasa said that between May 1999 and October 2001, the mobile termination fee rose from 20c to R1,23, an increase of 51 percent - before the arrival of Cell C. The rate is currently R1,25.
The fixed-line termination fee went up from 21c in December 2001 to 31c in January 2005, a 47 percent increase.
Interconnection rates are less than half in Tanzania (59c), Nigeria (59c) and Uganda (58c).
Icasa's plans for cheaper cellphone costs for consumers follows the recent price war between the top two cellular networks in respect of Internet and data usage, with Vodacom following the lead of MTN, who a month ago announced a reduction in data bundles by 61 percent.
Virgin's Internet prices
Ironically, Virgin Mobile, the young upstart, offers consumers data rates at 50c a meg. "We are still the cheapest and our price does not oblige you to be contracted to us," said Nicholas Maweni, the company's spokesperson.
He said Virgin Mobile was also the first to introduce per second billing. "There was no question about what people could expect. Our job is not to create a price war. We said at the start we would remain a true champion of consumers and they should pay for what they use," he said.
Most chat for under a minute
Maweni said most people spoke on the phone for less than a minute, sometimes shorter, for instance, when callers were notifying another party they were waiting outside or reminding someone to buy something. "People get charged for a whole minute the savings for per second billing are enormous, and can reduce a phone bill by as much as 60 percent," he said.
It was wrong for people to think they were getting a good deal when they were given an upgrade. "I associate upgrade with being transferred from economy on an airline to business class, where I am served with glass and not plastic what consumers are getting is a simple renewal of the contract," he said.
Zeona Motshabi, Cell C's chief corporate officer, said the recent reductions in data prices did not help the average data-using customer, who used less than 500MB a month.
"These customers represent the majority of data users, who are still being charged the same prices as previously. Only the tariffs related to the higher-end packages have been reduced," she said.
She said one of the reasons that cellular call costs were higher in South Africa than other countries was because of the current fixed cost of interconnection.
"Where we can, Cell C offers rates that reflect value for money. As the smallest operator, Cell C is still able to offer Woza Week-end at 50c per minute to all calls on the network. This level of pricing cannot be offered across the board, due to interconnection rates," she said.
Healthy market
Motshabi said the regulation of the interconnection rates of dominant operators would encourage competition, ultimately leading to a reduction in retail rates and operating costs. With Icasa's mobile call termination inquiry, lower call rates and better value for consumers could be on the horizon, she said.
Dot Field, the Vodacom spokesperson, said the reduction of data tariffs was an indication of a healthy and competitive market.
"Vodacom continuously reviews all elements of its offerings to ensure that we offer our customers the best value, and believe that the latest reduction will result in a substantial improvement in broadband penetration."
She said the reduction did not mean that customers had been overcharged for mobile data services.
"The decision to reduce data prices even further illustrates Vodacom's commitment and investment to make communications accessible to our customers," she said.
Field said Vodacom launched Happy Hours in 2005 - customers paid only R1,49 (including VAT) a minute for voice and video calls between 5pm and 8pm, Monday to Friday, unless customers were already paying less.
MTN has reduced rates on data contracts and data bundles by up to 20 percent, meaning customers can now also pay as little as 20c a MB when buying the 1GB data contract or data bundle.
Donovan Smith, the MTN general manager: consumer marketing, said the broader population, both contract and pay-as-you-go customers, could benefit from having affordable access to broadband, and as a network operator it had to remove the obvious barriers to entry. "With this price reduction, we aim to bring mobile data within reach of a larger portion of our population."
Richie Ebrahim, the technology expert from AV, the specialist magazine, said call costs from cellphone to cellphone should be reduced and made affordable.
"Consumers pay more than is required. Service providers make a fortune while users count the costs of their calls," he said.
Passion for profits is not matched by service
After 11 years with one Supercall Cellular, the cellphone service provider, the lure of a free phone is no longer sufficient to maintain loyalty.
There's no such thing as a free phone when one considers that on the Talk 500 since 1996, I, for example, have spent more than R100 000 talking. Free phones do come at a cost, a fact also highlighted by the Independent Communications Authority of South Africa.
At a time when consumers are spoilt for choice, one expects, in fact demands, good service from any service provider. Despite the long relationship, I found out this week that Altech Supercall Cellular's service leaves much to be desired.
Tanya Grobler, their sole expert on porting, was inaccessible. She did not return my calls during the past month or respond to questions sent by e-mail and fax this week. Of greater concern, her manager, was too busy to attend to my complaint. So much for service.
This should serve as a warning to consumers not to be suckered by service providers interested only in hooking people into long-term contracts. Once the contract is signed, expect no relationship to speak of, only the monthly bills.
Such an attitude is disrespectful. Supercall Cellular want my money but care less about me as a consumer.
That's why I believe one would be better off joining any one of the three network operators: Vodacom, MTN or Cell C. Virgin Mobile is a service provider that seems to operate with a wit and style lacking in the service provided by its money-hungry rivals. Which is the better connection, though?
Size does count. Therefore, the Vodacom muscle appeals. In my case it would seem logical to deal directly with Vodacom as a service provider since I am already on their network.
MTN's reach is not as wide and I'm not sure about the service, given its footprint in South Africa is smaller. Mind you, in the rest of Africa the company is growing in leaps and bounds.
I think Virgin Mobile is also worth considering because they offer cheap short-term options with few catches. They're also shaking up the monopoly. But one wants to feel secure behind a large company. Branson must do more to convince me that I should become a Virgin.
With a month left on my Altech Supercall Cellular contract, I'm looking forward to escaping the poor service. Grobler, who finally called, promised to respond to my questions, but has not done so.
As a customer with choices, why should I deal with a company that has no respect for its loyal consumers?
That's why earlier in the week, owing to the fact that consumers have differings views on porting, I decided to put the networks and my service provider to the test.
Questions were sent to the three networks, Virgin Mobile, the service provider, and, of course, the soon-to-be-jettisoned Supercall Cellular.
Nicholas Maweni, the spokesperson for Virgin Mobile, offered a compelling argument when he said as a consumer one needs to be acknowledged and respected. That's what they do at Virgin Mobile.
Cell C says it strives to give consumers a better deal in terms of prices, although it is often hamstrung in that it has to do what the goliaths Vodacom and MTN do. They also offer cheapest weekend rates.
Vodacom says it has an excellent unrivalled e-billing service and access to technology, and in the words of Nicolene Visser, the executive head: corporate communications: "a passion for consumers".
This article first appeared on the Sunday Independent.