Neotel treats companies, consumers the same

Neotel is offering consumers the same pricing as it offers its corporate customers, says Mukul Sharma, its executive head consumer business unit, but analysts say the claim is difficult to prove.

Speaking at the Cape Town launch of Neotel's consumer offerings yesterday, Sharma said: "While there will always be some very large enterprises that will be able to negotiate better deals, our pricing is the same for consumers and businesses."

This model breaks the usual practice by South African telecommunications operators in charging companies less per call because they offer bulk discounts. But Sharma says Neotel can do this because it is able to use better technology and that it has the philosophy of treating small businesses and consumers in a similar fashion.

He said that Neotel is "learning as it goes along" and is taking into account the needs of its customers.

"We are considering a number of different packages and bundles, such as bundling a PC with our offerings, it is logical, but we have to do it right," he said.

Sharma said what has proven to be quite popular are its data cards that are currently being tested.

Analysts say that comparing Neotel's prices against those of Telkom are extremely difficult because of the different packages. For instance, Neotel offers Internet access bundled with its basic service and its lowest offering with a 2.5G capacity starts at R399 per month.

BMI-TechKnowledge analyst Fezekile Mashinini says a basic analysis shows that the cost of a Neotel to Telkom call would be 34c per minute during peak time and 17c per minute during off peak periods. A Telkom to Neotel call would be 38c and 18.6c, respectively.

A Neotel national call would cost 53c per minute during peak hours and 33c per minute during off peak hours, while a Telkom call costs 65c and 32.5c, respectively.

"The major advantage that Neotel has over Telkom is that it has instituted per second billing from the very moment a call is made. Telkom first charges a minimum rate and then starts per second billing. The difference is very important for companies, especially the smaller ones that have to watch their costs closely," Mashinini said.

Another factor affecting Neotel, especially in the Western Cape, is the establishment of its base stations as the province has some of the strictest environmental laws in the country.

Corrie Froelich, head of Frost & Sullivan's ICT division, says coverage will be key to Neotel's success and it seems they have been targeting the various central business districts first.

"This makes a lot of sense as they are treating their consumers and their small business clients similarly. However, as they expand into the suburbs and more rural areas, they will have to do more and more environmental impact studies on where to locate base stations and this could impact their roll-out," he said.

Sharma said that ideally Neotel would like to co-locate its base stations with those of other operators and this is presently being negotiated.

Neotel's consumer offering is currently based on CDMA technology and consumers can sign for a 24-month contract, which the company is hoping to reduce in the future, Sharma said. The cost of the handset is about R2 000, which is amortised into the contract.

Currently, Neotel's products can be purchased through Postnet outlets, but Neotel officials says that other retailers are being considered and that plans are afoot to open Neotel branded shops.

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