Consumer is king... For now

Quick! Grab your piece of the telecoms consumer attention pie while it's still hot. Because I guarantee that it will cool and inevitably the consumer will go back to being the pauper instead of the king.

The South African consumer has been bombarded with some unique offerings lately. Queue Neotel's revamped consumer offering and the unveiling of fourth mobile operator 8ta.

While theses announcements alone have done much for promoting choice for the consumer, it is the market's reaction to the news that ultimately makes the difference.

To this end, I think it is great that South Africans have some real choice regarding both fixed-line and mobile connectivity. Competition in this industry has been muted at best and a change in attitude was sorely needed.

However, the realist in me knows that what might be all the hype right now will fade. Because when all is said and done, the telcos have a business to run and profit will always trump the freebie.

One only has to look back at when Virgin Mobile entered the market with its unique offerings, including month-to-month contracts, as well as a R99 airtime offering and 500 free SMSes. Despite the compelling offer, four years in the market, Virgin has only secured 250 000 subscribers.

At the time, the consumer welcomed the new competition. But failure to develop new offers and keep up the compelling deals saw Virgin realign its target from 10% of the local market share to only 1%.

That being said, consumers should take advantage of the fierce competition the market is currently experiencing.

There is an underlying indication that it is temporary and, before the consumer knows it, things will be back to business as usual.

Leigh-Ann Francis, telecoms editor, ITWeb

Case in point: 8ta last week introduced promotional offerings that include giving subscribers free talk time to any network, every time they receive calls from a mobile phone - one free second of airtime for every three seconds of call received. This benefit is available all day, every day.

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

In retaliation, MTN responded with a re-introduction of the MTN Zone 100% Mahala Calls and SMSes promotion.

The deal allows for discounts of up to 100% for voice and call services at certain times of the day. The discount is dependent on how much traffic is being passed through a particular area on the company's network.

Cell C also jumped on the bandwagon, arguing that 8ta was copying its existing R1.50 flat rate (R0.50 for SMS), which was introduced in November 2009. The company claimed it had since also introduced the flat rate to ControlChat and Postpaid subscribers.

“In addition, Cell C continues to reward its prepaid subscribers with free minutes at a 1:1 ratio. For each rand customers recharge with, they get one free minute. (The minimum required recharge amount is R10),” noted Cell C.

The fixed-line market has also seen a competitive shake-up as converged telecoms operator Neotel recently responded to heavy criticism of its lack of consumer focus with a complete revamp of its core offerings.

Among the new offerings, Neotel has introduced identical voice tariffs for prepaid and postpaid packages, free evening and weekend on-network calls, and a new entry-level data package for R99 per month.

Neotel MD Ajay Pandey said at the time that the revamp was a direct result of feedback from disgruntled consumers and industry criticism.

Despite the industry's renewed focus on the consumer industry, there is an underlying indication that it is temporary and, before the consumer knows it, things will be back to business as usual.

Neotel says it takes its commitment to the consumer market seriously; however, the company reiterated that it's overarching strategy, which allocates only a 10% consumer revenue focus, remains.

Pandey argued that the operator could not be everything and anything to everybody. Instead, Neotel will concentrate on fewer areas, but would do so in sharp focus to deliver competition and value to the market.

Therefore, despite the welcomed revamp, the consumer is still not a major priority for the business of Neotel and essentially the company will and must focus on what will keep it profitable.

Similarly, 8ta's launch offerings are promotional and are subject to adjustment post the launch hype.

“The 'send five SMSes per day and receive 50 free for that day promotion' is a component of the launch offer. The intention is to run promotions for approximately six months. 8ta is not going to end promotions at the end of six months,” explains the operator.

“The basic construct will remain, but the values may change depending on customer behaviour and preferences. 8ta will also offer new promotions in the future, to ensure that our customers receive more value,” continues 8ta.

Important to note, says the operator, is that the base rate will remain as filed.

Competition is great, but it is not consistent. Right now the industry is flexing its muscles in response to the new kid on the block.

But, the hype will die down and in the likely event that 8ta gets complacent with its offerings, competition will return to a normal medium.

When this happens, I urge consumers to draw on their one weapon against big business: choice.

There is no longer an obligation to “choose wisely”, but rather to “choose freely”. Do this and perhaps we can hold the throne for a little longer than expected.