8ta's Jedi mind tricks

Well knock me over with a feather, because - despite my reservations about 8ta's success in entering a saturated mobile market - the fledgling newcomer has stunned us all, so much so that nearly 200 000 of you are now proud 8ta subscribers.

To put this in perspective, Virgin Mobile, which entered the market only four years ago, recently reached the 250 000 subscriber mark. 8ta is closing in on that milestone only a month on the job.

Even more unnerving is that, based on this new information, I may have to take back my muffled sniggers when the newcomer announced its ambitions of securing between 12% and 15% of the market within five years.

At the time, it seemed way too ambitious - given the experience of existing incumbents in reaching those targets. For example, Cell C, now in the South African market for nine years already, only just achieved over 13% market share.

But, if 8ta sustains its current growth rate, it could achieve its target in approximately three-and-a-half years.

Realistically speaking though, it will take a lot more than special introductory offers and a glitzy marketing campaign to sustain this kind of growth.

So for now I will still hold onto my scepticism, but I am a whole lot more aware that 8ta must be doing something right - but what?

It is likely 8ta's success can be attributed to the unique, and yes even compelling, introductory offers, which it has unveiled for both prepaid and postpaid voice offerings. However, every deal, like a trick, has a catch.

At its unveiling, 8ta revealed its prepaid voice offering. As part of the introductory offer, the operator offered its customers one minute of free talk time for every three minutes of calls received from any network.

Additionally, when users send five SMSes in a day, 8ta will give subscribers 50 bonus SMSes at no extra cost to use that same day.

I may have to take back my muffled sniggers when the newcomer announced its ambitions of securing between 12% and 15% of the market within five years.

Leigh-Ann Francis, telecoms editor, ITWeb

This may seem extremely compelling to the average South African prepaid mobile consumer. But we are a jaded bunch and the first question posed to the new operator was how long the offer would last.

Knowing that it was only meant to be an introductory offer and that the deal would probably change a few months post-launch, 8ta decided it was necessary to give its potential customer some kind of surety.

So the operator announced the first one million subscribers would get the deal for life. Smart move, I'd say.

8ta's other key differentiator is that it came to market with heavily reduced tariffs and this is what truly matters to the consumer.

However, 8ta has employed per-minute billing, which means that from the first second of the call, you will pay for the full minute, regardless of whether you communicate for the full minute. When you consider the offering in that context, it becomes slightly less appealing.

8ta made a similar introductory offer for its contract deals, which awards the first 100 000 subscribers the opportunity to nominate a Telkom landline to which the subscriber will be able to make unlimited calls for the duration of their contract.

Again, at first glance this offer seems awesome. Who wouldn't want a free unlimited line of communication? But there are limitations - it's restricted to a landline. In this day and age, landlines, for personal use, at least, are few and far between - so who are you going to call?

To further illustrate my point, 8ta's contract offering put great emphasis on greater on-net free call minutes. But at launch, those free on-net calls are not compelling, because there are too few subscribers on the network to take advantage of the offer.

On the other hand - with nearly 200 000 customers - the offer will grow to be more and more compelling with time. My only hope is that, when subscriber numbers grow for the offer to be compelling, the deal remains intact.

Regardless of my devil's advocate take on 8ta's offerings, it can't be argued that the newcomer is off to a great start. For that 8ta must be plugging some of the gaps that exist in mobile consumers' wants and needs - but how?

No, I'm not suggesting Telkom is Darth Vader in this metaphor, but simply that 8ta has some pretty strong backing.

Telkom is a telecommunications conglomerate with decades of experience under its belt. The company's infrastructure and technical “know-how” must not and should not be underestimated.

Add to that, the recognition and prevalence of the Telkom brand in SA. And, yes, one might argue that the brand is often tainted by a range of negative connotations, but it is what the South African consumer knows.

And when we get past the fluff of branding and support, and get to the nitty-gritty, the financial backing that Telkom is pumping into getting 8ta up and running is more than significant.

The nature of the relationship means that even issues of interconnect costs are minimised, because it essentially will get absorbed back into the business. Which makes 8ta's offering of free and unlimited calls to a landline not only an obvious one, but an expected one.

However, my observation must be put into context and for this reason I must recognise that 8ta is a business that must be driven towards a profit. Thus, 8ta has been strategic in offering compelling, but not irrational offerings.

What the company is getting right is playing on the psychology of the consumer. A basic business principle is based on serving a want or need.

If 8ta continues to do this, then perhaps its targets are not so ambitious. And perhaps choice in the mobile galaxy will not be so far, far away...