Johannesburg - Cellular company MTN South Africa on Monday introduced new pricing for its mobile internet services, in a move likely to spark a price war.
This follows the recent introduction of uncapped ADSL broadband internet connections by MWEB which has started a price battle for fixed-line access, with other service providers such as Vox Telecom and Afrihost following suit.
The resultant consumer benefits were isolated to ADSL, however, excluding consumers that rely on mobile and wireless internet connectivity.
MTN's new pricing introduces uncapped, time-based mobile connections for the first time, while the company also dropped its out-of-bundle data rates by up to 84%. A one-day, unlimited usage bundle has been introduced for R50.
Once activated, the one-day bundle will last for 24 hours, but MTN will incorporate a fair use policy of 150MB. When this limit has been reached the connection speed will be throttled down to 128Kbps, but the bundle will remain uncapped in how much data can be consumed for the remainder of the 24-hour period.
In addition, MTN has a 90-minute data bundle at R25. The speed of this will be limited to 128Kbps and is valid for 30 days with an additional 30-day carry-over of unused minutes.
Competitor Vodacom declined to say how it will react: "Vodacom will ensure its offerings are competitive, and is constantly looking at ways to improve its value offerings," the group said.
ADSL is far cheaper than cellular access now, whereas in the past South Africans enjoyed price parity between fixed-line and mobile access which made the market unique internationally.
Steve Briggs, executive head of commercial services at iBurst, said there are also significant differences between wireless and mobile connectivity services. And whereas many internet service providers in SA offer ADSL access, only two offer cellular services such as 3G.
"There are essentially three major wireless technologies - the first two are 'nomadic' - you can move around, but they're not fully mobile, such as iBurst wireless, which is an entry-level solution, and WiMax, a newer, faster technology which is becoming the preferred option.
"3G is currently the only totally mobile wireless data access, and pricing here is effectively dictated by the two large mobile operators," explained Briggs.
Mobile broadband cheaper in SA
He added that prices have been decreasing over recent years, but that this was happening more gradually than the recent cuts.
"Prices are coming down in wireless, although perhaps not as fast as in the ADSL environment. iBurst's wireless offerings have gone from R369 for a one gig package in 2007, to R199 in 2008 to R149 in 2009/2010 and will continue to fall," said Briggs.
"In the ADSL world, bandwidth prices have come down very sharply of late, although the access line fee that you pay Telkom has not changed a lot in the past few years. This fee is now the lion's share of the total cost of an ADSL connection.
"In the fixed-line ADSL world much of the infrastructure, especially the copper in the ground, is already there and paid for. In the wireless world, we're still having to build towers and other infrastructure, which requires considerable capital expenditure. We need to be competitive with wireline offerings, though, so we're needing to price very carefully."
Steven Ambrose, MD of research and consulting firm World Wide Worx Strategy, said mobile broadband was traditionally cheaper in SA than the rest of the world, and considerably cheaper than fixed-line solutions like ADSL.
"[But] Broadband in SA is finally starting to emulate other developed world countries, where fixed access is significantly cheaper than mobile and/ or wireless access."
Ambrose said the recent release of uncapped ADSL, fixed-line pricing is approaching commodity status.
"Very real issues, spectrum and infrastructure, will make wireless access more expensive overall than fixed," said Ambrose. "Until very recently, a situation existed whereby wireless broadband was parity priced with ADSL.
"As a result, the convenience and demand for access drove adoption. I expect that will change slowly going forward, as fixed access becomes significantly cheaper and competition grows, with the roll-out of self-provision and local loop unbundling, which will come into effect in the next three years."
Still, Ambrose said prices for mobile access will continue to fall, but not to the same extent as fixed access.
"I just don't expect an all-you-can-eat product, at a low cost, from the wireless operators in the foreseeable future."
- Fin24.com