Brace yourself. The most exciting development in SA’s cellular industry right now is a move by ... Telkom.
Last week the fixed-line behemoth — which mobile network operators in years past managed to usurp for voice calls and wireless broadband by offering more flexibility — turned the tables on these now dominant networks with its own aggressively cheap deals.
Telkom launched a competitive range of new products, focused on data — instead of voice — that should be giving the other networks sleepless nights. Called FreeMe, the packages start at R99 for 1GB, and extend to R999 for unlimited voice, data and SMSes.
The deal-maker is that all its packages offer free messaging and voice-over-Internet-Protocol (VoIP) calls via WhatsApp, BlackBerry Messenger and Viber. Deals with Skype and FaceTime are on the way.
The prices are the same for both prepaid and contract customers.
Instead of the confusing bundles linked essentially to call minutes, Telkom has turned everything on its head by focusing on data, which is the new dominant revenue stream, as more and more people use their mobiles for messaging, surfing, Googling, tweeting, Facebooking and YouTubing.
It’s a welcome relief. Cellphone packages and the confusing way bundles are constructed have been the bane of the cellular user for two decades. There always seems to be a catch; and consumers can rightfully feel that, as in gambling, the house always wins.
But Telkom, the former landline monopolist, is uncharacteristically the underdog in mobile.
Telkom is a distant fourth in the mobile space, behind Vodacom’s 37.7% market share, MTN’s 36% and Cell C’s 23%. It has just 2.6% of the market, says Research ICT Africa.
With its vast resources and abundance of spectrum, Telkom is able to use economies of scale to offer these great deals. Telkom’s Attila Vitai, CEO of its consumer and small business division, says this is possible because Telkom is converting its 1.8GHz spectrum from old 2G voice calls to provide 4G/LTE data services.
The industry calls this "refarming" and it shows just how valuable these previously underutilised frequencies are.
Meanwhile, VoIP calling has gone through various cycles of efficiency and it’s now mostly on a par with the old traditional switched voice networks. I’ve been using them for years to stay in touch with friends overseas, or calling home when I travel internationally.
Call quality using Skype, FaceTime, WhatsApp and WeChat is as good as plain old voice, I’ve found; and I’ve noticed how many people prefer these data channels when calling me, even in SA.
It makes perfect sense: why pay for an expensive voice call when a VoIP call is just as good and free?
Telkom, through a funny set of advertisements overseen by its chief marketing officer, Enzo Scarcella, has highlighted a few of the problems with traditional bundled offerings, including a bizarre charge for an itemised bill; essentially a bill for a bill.
Another clincher is that Telkom has 6,000 Wi-Fi hotspots around the country that are free for its mobile customers.
It offers free "on-network" calls to other Telkom mobile or landline numbers — a staple of US calling plans for years — and "fair usage" voice minutes for its top-end 20GB (R599/month) and unlimited R999/month packages.
With these data packages and the zero-rating of VoIP calls, a Telkom subscriber could conceivably never need to pay for voice calls again.
I don’t expect a rush of "me-too" packages from the other networks immediately. Quite prudently, they are likely to wait and see how much churn these FreeMe packages create for existing customers.
Telkom has confounded critics with these aggressive, data-centric packages. Now, let’s see how the mobile market reacts to this simplification and to Telkom’s new role as the disruptive underdog.