Why we need change in the SA mobile space
Why we need change in the SA mobile space and how to achieve it
By Brett Howell
South African mobile contract customers have had a raw deal lately, increasing their frustrations with the big mobile operators. Three of the major operators – Vodacom, MTN and Cell C – unexpectedly and in quick succession hiked their rates, a move that is now being investigated by the National Consumer Commission (NCC) and the Independent Communications Authority (ICASA).
The high cost of mobile services in this country, which is worsening the digital divide, has had ICASA and the ordinary consumers it is trying to protect, seeing red for a while. But the problems mobile customers in South Africa face go further back than just the recent mobile tariff hikes. Common frustrations with poor service, network issues and contract lock-in are mounting and analysts are predicting that post-paid contract holders will increasingly seek to migrate to more flexible and controllable payment options or voice and data bundles, in line with the global trend.
That’s a market challenge – and opportunity – we recognised when we spent time last year studying the market. We did this with the aim of developinga business plan for a new Mobile Virtual Network Operator (MVNO) that would offer solutions to these common problems of price, service and contract flexibility. Our team included experts from the MVN-X Group, a company that provides the technical backbone to niche mobile offerings such as Mr Price’s MPR Mobile, and who hasexperience in developing mobile solutions for businesses, including infrastructure, operating systems and processes.
Bringing real customer-centricity to the mobile industry
Our investigations revealed that majority of consumers were frustrated with being tied into 24-month contracts and wantedmore flexible andconvenient ways to take control of theirmobile voice and data services. A web-based solution that offers all the benefits and none of the limitations of the traditional contract model and its poor cousin,the pre-paid model, was the obvious route. It not only provided consumers ultimate convenience but also resulted in huge cost savings that we could pass onto the customer in turn.
Alongside creating an online platform for people to manage their mobile spending, we had to reinvent the customer service model as well as voice and data pricing models. But being a nimble, low cost new operator in the market, with innovative ideas on how to approach mobile services in South Africa, this wasn’t too hard.
This was our target consumers’ only hope of drastic and positive change in the mobile industry, over a short time period.
A traditional mobile market in crisis – and customers are paying
Although big operators are still massively successful at marketing to mass audiences and satisfying their shareholders, consumers sentiment toward the bug guys indicates times may be changing and consumers are starting to stand up for their mobile rights
Right now the big telcos are all facing the reality of diminishing margins as a result of the prepaid price wars and the reduction of mobile termination rates. They themselves admitted that they werehurt by ICASA’s movelast year to reducing the highly profitable call termination rates charged to customers who connected with friends on other networks. These profits were vital to their survival.
At the same time, the Right2Know (R2K) Campaign demanded fromSA’s big four mobile operators late last yearthat they stop their “promotional gimmicks” and put all their customers – prepaid and contract – on their lowest call rates.
The big players faced the dilemma that on the one hand they needed to spend much more to win more market share. That’s why we are seeing them looking for new revenue streams or mergers and acquisitions, such the Vodacom Neotel deal, MTN and Telkom’s roaming partnership and Cell C’s move to buy competitors’ customers out of their contracts.
On the other hand, cost-cutting has become a necessity, and sore point, for the industry. MTN, Telkom and Cell C have all announced major restructuring and retrenchment plans. While Vodacom has not, it did say it would be implementing a “cost containment programme”.
Amidst all of this, the big telcos arestill losing favour with investors, shareholder, customers, unions and unionised staff. They are all facing decreasing consumer satisfaction (all except Cell C, which showed improvements off a low base), according to the recently released SA Consumer Satisfaction Index for the mobile industry.
Isn’t it madness to launch MVNOs in the strained current telco environment?
It may seem like a crazy idea for new mobile operators to launch in the current environment, but we think it’s exactly the right time to start offering the market some viablealternatives. There has never been a better time for MVNOs, niche mobile providers like me&you mobile, Mr Price’s MRP Mobile and FNB Connect to launch in this country.
Firstly, Cell C, which is South Africa’s most affordable mobile network operator, has made itself available as the sole wholesale talk time and data reseller to SA’s rising band of MVNOs. This means MVNOs can now set up shop in SA and offer highly competitive talk time and data packages to their consumers, repackaged under their own brands, along with their own customer service models. And while Cell C has faced some customer satisfaction issues over the quality of its network, they are now investing heavily in strengthening its network.
Secondly, the current volatile market conditions are creating a window of opportunity for niche providers to come in and challenge the way the big operators operate and have been operating for a long time.
The big guys can’t afford to sustain their price wars indefinitely, because they are hamstrung by bloated business models with high operating costs. But the MVNOs don’t have this problem. They are lean, nimble and efficient.
The MVNOs are also able to respond to market demands very quickly and to give consumers exactly what they want. And they can do this without trapping their customers in the same confusing spiral of choice we’ve seen previously in this country. According to the calculations of expert industry analysts, such as Tariffic, ResearchICTAfrica and BMI-TechKnowledge, there are literally tens of thousands of different packages available right now – be it pre-paid or post-paid, in and out of bundle – all with a myriad of tariff structures. That is just bewildering. No wonder consumers are begging for simplicity.
The mobile industry could learn a thing or two from the masters of consumer-centric simplicity and flexibility, Capitec Bank, Uber, AirBnB and even CliffCentral. They all operate primarily online and rely on technology, they have one main premise and offering, and they give people what they have wanted for a long time: a seamless online user experience coupled with an innovative offering.
So far, quite surprisingly, me&you mobile seems to be the only mobile option on the market to offer the rare combination of pre-paid flexibility along with the practical convenience of a post-paid contract and the simplicity of e-commerce. This is made possible by leaving the mobile phone out of the contract equation. It’s easy and affordable enough to buy a phone separately through an independent handset reseller, the bank or the second hand market.
With an idea so simple and way overdue, we expect others to follow suit in the near future.
Ultimately, the point is that if we can embrace simplicity, flexibility and customer-centricity, others can do it too. The entire business culture in the mobile industry needs adapt to the changing times, as we’ve seen other industries do. If we don’t do that, we stagnate. And that’s no good for anybody.
Brett Howell is the CEO of me&you mobile, SA’s first SIM-only, fully online mobile network and the first network to offer simple, fully customisable, month-to-month mobile packages. The company was born out of consumer frustration with regular mobile networks’ expensive packages, complicated contracts with 24 month lock-in and poor customer service. Its unique business model allows the provider to guarantee the lowest call rates in the country. Users manage their accounts via personal online profiles and can easily connect with me&you mobile’s help desk online on www.meandyoumobile.co.za or via WhatsApp or SMS.