Cell C makes its big move

Cell C today announced its long-anticipated move to bring down cellphone call costs, expected since Alan Knott-Craig took over the reins and threatened an industry shake-up. SEAN BACHER reports.

After several months of speculation, Cell C announced today that it would slash prepaid call rates by more than 34%, making them “in many cases cheaper than postpaid rates for the first time in 18 years””.

A new tariff plan, called 99 Cents for Real, brings the cost of pre-paid calls – both peak and off-peak – down to 99c. This compares well with some of the best contract call costs on the market.

“”In a bid to meet consumer demand, Cell C is releasing a new prepaid voice product and tariff plan called 99 Cents For Real, which slashes off-net, and peak call tariffs to 99c per minute, with per second billing from the first second,”” Cell C announced.

The new tariff, which kicks in from 20 May, addresses four major issues in the market:

* the high cost of pre-paid calls:

* the huge price difference between peak and off-peak rates as well as between on-network and “”off-net”” calls:

* the complexity of mobile pricing structure:

* the “”broken minute””, which refers to the large parts of per-minute-billed voice calls that are not used.

An aggressive move on pricing has been anticipated since it was announced in January that Alan Knott-Craig would take over the reins at Cell C. As former CEO of Vodacom, he was one of the most fiercely competitive executives in South Africa. He formally took over the position at Cell C on 1 April, and the market has been holding its breath for his first moves on pricing.

Cell C CEO Alan Knott-Craig

In Cell C’s announcement today, he made his competitive intentions clear:

‚This new tariff gives Cell C’s prepaid customers the best voice rate in the market, making it ‚ in most cases ‚ even cheaper to call from Cell C to other networks than it is for our competitors’ own prepaid customers to make on-net calls.

‚Customers can phone who they want, when they want. They do not have to worry about peak or off-peak times, to which network the call is being made or in which zone they are. This is by far the most competitive, fair and transparent rate in the market today.‚

Cell C promised “”pure per second billing from the first second”” on the new tariff. This, it said, “”means that calls to any local network at any time will cost less than 2c per second””.

‚It is an unprecedented rate cut, which pre-empts lower Mobile Termination Rates (MTRs) next year, and will drive competition in the market to the benefit of consumers,”” said Knott-Craig.

Peak MTRs are currently R0.56 per minute. In announcing the new tariff, Knott-Craig also made an open challenge to ICASA:

“”I say ‚drop MTRs even further, provide Cell C with asymmetrical MTRs to help us achieve the scalability we need to compete even more fiercely with the large incumbents, and we will surprise you and them with our response. Help us to help the consumer’. With a vigilant Competition Board, the playing fields will be leveled, and competition will flourish in the telecoms sector with Cell C setting the pace.‚

Possibly in an attempt to further unsettle the competition, he warned that new tariffs were not the only strategies he had in place:

‚I say again: ‚Price is not a Strategy’, but it sure beats the hell out of strategies based on high prices.‚

As part of the new package, Cell C is cutting the rate of MMS messaging to 99c per message and giving pre-paid customers ad hoc data use at 99c per MB. SMS charges will remain unchanged at 50c per message to any network.

From 20 May, current Cell C prepaid customers will be able to migrate their existing tariff plans to the new plan by dialling 141 and following the voice prompts.

‚Cell C promised to make a difference in the market, and this is but one of our initiatives planned at achieving that goal,‚ says Knott-Craig.

* Follow Sean on Twitter on @seanbacher

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