From any respectable mobile phone company’s point of view, the fact that I don’t have a monthly contract is ridiculous.
As someone with a stable and relatively high income (I don’t earn much, but the wolves are from the door) I’m exactly the kind of customer phone companies should be trying to tie in to a contract. Especially one of those ridiculous two-year ones that Apple invented with its iPhone handcuffs.
No chance.
One of the many goals common to networks all over the world is to transfer as many customers as possible from low value, high churn pay-as-you-go customers into high value, loyal contract subscribers. To figure out why, you only have to look at MTN’s latest financial announcement in which it revealed it booted more than a million South Africans from its network in the period from January to March this year alone, for the simple reason that they hadn’t spent any money.
Not only do pay-as-you-go customers not spend much, they’re fickle and they switch from network to network following the best offers. Offers which, from a phone company’s point of view, are expensive to run and market. So much easier and better from a financial point of view to lock a customer in for a guaranteed amount for a lengthy period of time.
There’s nothing subtle about the tricks mobile companies use: heavily discounted call and data rates, generous bundles of free minutes and free stuff and generously subsidised loans for new handsets that cost a fortune to buy outright.
Earlier this week, Cell C announced that it is expanding the number of pre-pay options it offers and increasing the amount of ‘Supacharge’ bonuses it gives to customers. It’s the latter which makes it almost impossible for me to buy into a contract. Behind the headline figures, it’s the hidden extras which are hard to analyse but best for pre-payers. You buy into a contract and you get… a contract. Stay on prepay and there’s all kinds of bonuses thrown in for free. That’s why the war for pre-pay customers, which Vodacom and MTN are fighting with low but time limited rates, is benefiting people like me more than anything else in the market.
Why? Because data, stupid.
Just looking at Cell C – disclosure, I am a customer, and really hacked off with the network quality issues like you – if I was in the market to buy a new phone right now my priority would be data use. I spend a lot more time reading mail, surfing the net, listening to Spotify and using Google Maps than I do actually making calls.
Say I went for a new Galaxy S5. The basic deal is R469 for 24 months, which gets me the phone, 100 minutes of airtime, 100 SMSs and 100MB of data. I could probably get by with the minutes and SMS value, but I use between 800MB to a gig of data a month.
That’s not a huge amount by some standards, but I never skimp on data services, update apps over the cell network and use my phone as a hotspot regularly. The only thing I don’t really do is watch much video on it.
For 800MB a month with the S5, I’m looking at R899 a month on Cell C.
That’s a lot of money. More than I’m prepared to spend. Plus, if I go over my included allowance I stand the chance of being hit with punitive charges that are, frankly, obscene.
If I’m smart, I buy the phone through a third party (FNB will sell it to me for R399 a month) and get the service on contract. Opting for a pre-pay contract to go with it (again with Cell C), R200 a month on top of that gets me 600MBs of data, plus enough credit to phone my family on the same network and buy extra bundles to top-up the data use when I need it.
Total = R599 a month, I just saved R300 a month.
Of course, shopping around for special offers reveals that Vodacom currently has a promotion around the S5 which offers a gig of data a month for R549, and the very best offer comes from Telkom, which is offering the same phone with 2GB of data a month (with some restrictions) for just R449. You can also get a (superior, imo) LG G2 and1.2GB of data a month for R349 – but only for 12 months.
Telkom’s deal might tempt me, but like most people, I’m not in the market for a new phone. I might think I am, but my current handset is perfectly functional, it’s just that it’s out of contract. None of the deals are good enough to tempt me to trade in my perfectly functional phone for the sake of an upgrade – and I’m a gadget fan. What hope for capturing the attention of some one who really doesn’t care about latest and greatest?
But the bottom line is this: the fact that going it’s a tough decision in South Africa is something that networks overseas would find hysterical. If there’s no real, obvious benefit to a 24 month contract, why on Earth would I want to buy one?
