The game for mobile operators is shifting from voice to data, but that may leave consumers with a nasty bill shock, says an industry insider.
“The first thing many consumers have been noticing is a significant increase in their monthly bills. The cause, in many cases, is an underlying shift in operators’ business focus, from voice to data,” said Rob Lith, director at Connection Telecom.
Lith has been involved in the ICT industry for the last 20 years and sees VoIP, location-based services and presence as the next wave of technological advancement.
Mobile operators have seen massive growth in data consumption as consumers turn to services like Skype, WhatsApp and others for instant communication at lower costs compared to traditional voice services.
However, the shift to data has seen operators moving to squeeze more revenue out of data as voice and even SMS declines.
“Between 2010 and April 2014, the communications regulator forced down cellular voice tariffs by lowering the interconnect rate (the price per minute that mobile operators pay each other to terminate voice calls), from R1.25 to 20c.
“As a result, voice revenue can no longer sustain mobile operator profits (Vodacom reports having lost R400m in three months to the plummeting interconnect rate), and so operators are looking to data to maintain the lifestyles they’ve become accustomed to,” Lith explained.
Though the data rates have fallen far below what they were 2004, an increase in networks speed results in customers using more data.
In its annual results presentation, Vodacom reported a 21.8% growth in international customers, with an 86.4% growth in data customers.
The growth of smartphones means that data use is set to increase exponentially. (Duncan Alfreds, Fin24)
South Africans, however, have long complained that they pay too much for mobile services.
In terms of out of bundle rates for data, Vodacom subscribers pay up to R2 per megabyte, MTN customers from R1.20 to R2, but Cell C recently shook up the market when it increased its rates.
The operator has a history of trying to disrupt the mobile market in SA with low call rates and data – selling its data at just 15c for out of bundle rates. Cell C recently increased that to 99c.
But consumers have options, said Lith. Instant messaging services and Voice over Internet Protocol (voip) are seeing increasing traction.
“It’s obvious – use an OTT application like Skype or an alternative network provider such as Connection Telecom, which offers smartphone-based softphone apps over any wireless data connection, such as Wi-Fi,” said Lith.
It’s a solution that other companies have spotted.
Orange is not a mobile operator in SA, but the company has rolled out a Wi-Fi service in a partnership with African Eagle Tourism to provide free Wi-Fi services within their fleet of vehicles.
“I think there is a great opportunity in South Africa because there is a lack of data use. There is a lack of data use because of a lack of infrastructure, especially on Wi-Fi. The question has to be put on the table: Is it normal that the main mobile operators don’t cover the entire country by investing in 3G or 4G and they restrict their investment to the rich areas?” Sèbastien Crozier, Orange Horizons CEO told Fin24.