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8ta puts out a contract – but lags Cell C

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Only weeks after announcing the pre-paid package costs that have helped to shift the South African mobile market, Telkom have announced contract pricing for its 8ta mobile service. However, the deals on offer are less likely to have other networks hopping. And its data bundles fall far short of the line drawn in the sand by rival Cell C. ARTHUR GOLDSTUCK analyses the new contract pricing.

Following the launch of Telkom’s pre-paid mobile products and services under the 8ta brand last month, the market has eagerly awaited contract pricing from the fourth mobile network. That announcement came on 8 November, and offered far fewer fireworks than the past weekend’s muted Guy Fawkes displays.

8ta described its contract and top-up offers as “highly competitive””, and said it expected to attract a “”whole new wave of customers, following the rapid uptake of pre-paid products”” by customers who had been intrigued by the Heita campaign. However, it declined to release figures of initial sign-ons, raising question marks over just how successful it had been up to that point. If a service boasts rapid uptake, it must put its figures where its marketing mouth is.

8ta’s contract offers range from R90 to R500 per month. Each package is ‚accompanied by groundbreaking offers””. For example, “”for the first time in South Africa””, contract customers will be able to make free and unlimited calls to a single landline number that he or she chooses. However, this will apply only to the first 100 000 customers. And, of course, those landline numbers are on the Telkom network as well, making it the equivalent of free on-net calls. Other networks have from time to time offered free calls to fellow users of the same network during prescribed times, and are likely to reintroduce such services to counter the Telkom landline offer.

The packages also extend the “”50 free SMSs for every 5 SMSs sent”” pre-paid offer to all contract packages. The 65c anytime flat rate to landlines is also being extended to contract packages.

Four ‚saver‚ (top-up) packages ranging from R50 to R250 are being bundled with benefits like the 50 free SMSs, the R1.50 flat rate and 65c tariff to landlines offered to prepaid customers.

All packages include handsets. It is here that 8ta may have an edge. Most contracts include two phones for the typical contract price of a single phone. However, it is debatable whether anyone would want the pairings on offer, with for example the Nokia N8 and Nokia 2710i in a bundle for R500 a month. The customer for a cutting edge N8 is going to have issues with the specs of the 2710i.

On the other hand, its laptop bundles are somewhat compelling. More so, surprisingly, than its Internet bundles.

8ta has launched three Internet packages that it says “”will provide an overall superior user experience in terms of pricing, real time usage information (customers can view in real time how many megabytes they have used) and network quality – all made possible by state for the art technology””.

One element of the Internet offering is likely to make other networks sit up and take notice: a flat out of bundle rate of 30c. Until Cell C launched its own Internet services recently, the rate for ad hoc mobile broadband usage on 3G networks in South Africa had been R2 per MB – a rate that had not come down in four years. Cell C slashed this to 39c out of bundle.

Curiously, however, 8ta’s cheapest bundle price for broadband is not better than its out-of-bundle rate: R250 for 650MB on its Internet 1 package. It gets better with the Internet 2 package: R280 for 1.5GB. And, on Internet 3, it goes to R500 for 3.2GB.

If customers use the entire data bundle before month end, they will be presented with a choice, while browsing, to either:

* Continue surfing for free at a slower speed. This will be limited to 10% of the subscriber’s chosen data bundle.

* Wait till next month to start using the service again

* Choose to surf at out of bundle rates

* Purchase a once-off data bundle.

Telkom’s bundled prices still do not come close to matching those of Cell C, however. On its most basic contract, Cell C charges R149 a month (on a 12 month contract) or a once-off payment of R1 499 for 2GB of data a month, with a 7.2 Mbps USB modem included. For R299 a month, or a once-off R2 999, they offer 5GB of data a month, with a 21Mbps USB modem included.

It is in the laptop and netbook bundles that 8ta could clean up: For R195 a month, the 10.1-inch Samsung N230 comes with a data modem and 650MB of data a month ‚ not very different to what consumers have been paying for data bundles with only modems on MTN and Vodacom. However, the contract period is three years, and that’s a long time in the life of both a netbook and a data contract to which you committed way back in 2010. Think 2013. Now think back. Remember 2010? That’s the year when we still used notebooks instead of tablet computers, and most South Africans were still paying more than a R100 for 1GB of mobile data.

To be charitable to Telkom, they may want to test the market first. They may well intend bringing mobile data down to the price of ADSL. That’s the way the market had hoped they would transform mobile broadband in South Africa. They may well bring contract call costs down to the equivalent of landline calls plus the interconnect fee. They may offer cutting edge tablet computers at prices that do not appear to bleed the consumer over the period of a contract. But they don’t do any of those things yet.

The 8ta contracts represent a new set of options in South Africa’s mobile market, but do not represent significant competition in the way that its pre-paid offerings did. They do show what is possible in the future, but the consumer is not going to sign up to a three-year wait for that future to arrive.

* Telkom issued a correction of the price of their Internet 1 bundle today (9 November):

It will be R195 for 650MB, and not R250. This means it is exactly equivalent to their out-of-bundle data charge, and more than three times as expensive as Cell C’s entry-level contract (R149 for 2GB of data).

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