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ISPs must toe the line

Jun 24 2011 11:22 Simon Dingle

Company Data

TELKOM SA SOC LIMITED [JSE:TKG]

Last traded 55.46
Change -0.04
% Change 0.00
Cumulative volume 966272
Market cap 28.88bn

Last Updated: 19/09/2014 at 04:26. Prices are delayed by 15 minutes. Source: McGregor BFA

VODACOM GROUP LIMITED [JSE:VOD]

Last traded 130.24
Change 0.54
% Change 0.00
Cumulative volume 484921
Market cap 193.79bn

Last Updated: 19/09/2014 at 04:25. Prices are delayed by 15 minutes. Source: McGregor BFA

MTN GROUP LIMITED [JSE:MTN]

Last traded 256.33
Change 2.37
% Change 0.01
Cumulative volume 2557717
Market cap 473.79bn

Last Updated: 19/09/2014 at 04:26. Prices are delayed by 15 minutes. Source: McGregor BFA

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IN THE last few months South African internet service providers have announced further reductions to broadband prices and introduced other breakthrough services for their customers. Unfortunately these things always seem to come with caveats and limits that are not made immediately obvious.

FNB Connect, the innovative internet service provider wing of First National Bank, introduced free access to internet video service YouTube for its subscribers last month. This was an amazing announcement as YouTube can be bandwidth intensive.

YouTube is a big deal in my house. My young children, being 3 and 6, have learnt that many of their favourite television programmes are available on YouTube and often ask to watch them that way. Free access to YouTube would have made me switch from my current ISP to FNB Connect in a moment.

Alas, the free access was only for the month of June, after which things go back to normal.

This week Telkom [JSE:TKG] consumer mobile brand 8ta made a major announcement, introducing a 10GB 3G data bundle for R200 per month with the option of paying an additional R100 for an extra 10GB to be used during the early hours of the morning.

This would make 8ta the cheapest provider of mobile broadband in South Africa. But wait - it's just a promotion, even if 8ta wouldn't confirm when the special will end.

It's also important to note that the offer will only be active in areas where Telkom has built its own 8ta infrastructure. The network runs on MTN Group [JSE:MTN] in other areas where the special will not be available.

It's very difficult for South Africans to make buying decisions when we can't be sure of the conditions. We would like to choose the best provider for the best price, sign up and then carry on with our lives.

Instead, I find myself constantly chopping and changing between service providers as these announcements are made and service deteriorates on networks that are overloaded during times of promotion. I'm now at the stage where I don't mind paying a bit more just to not have to worry about it.

When Cell C shook up the mobile broadband market last year, many South Africans switched to the service. Cell C still faces challenges in many areas of South Africa, however, making it difficult to rely on the connection. It works like a dream at my office but I don't have coverage at home, for example.

Then Vodacom Group [JSE:VOD] dropped its prices, then MTN followed suit, now 8ta has better prices, but only for a limited time. Meanwhile at home I have to rely on ADSL, where my uncapped provider leaves a lot to be desired; I switched to FNB Connect for June, but now have to switch back or look for the next amazing limited-time offer.

I suspect many South Africans feel the same confusion.

Promotions are introduced and customers flock to the service, which then breaks down under the load. And we're off to the next provider with a big announcement.

Successful business is about retention. Winning new business through promotions is a great idea, but you need those customers to stick around. You also need to be sure that you can support growth in subscribers before unleashing an unbeatable special.

A better approach would be to apply some honesty and acceptance of what is really possible. You might not be able to be cheaper than the other guys - but perhaps the quality of your network is better. If network reliability is an issue, then address service. I suspect many South Africans would be willing to pay a bit more if they received better treatment from call centres and other touch points with service providers.

Give us certainty that we're getting the best bang for our buck. Business has proven time and time again that you don't have to be the cheapest player on the block. Customers will pay for service and convenience.

If the best you can do is a short-term promotion and your network can't support the growth, then expect to fly by night. You'll be the bee's knees until the promo ends or your network breaks down - and then all the gains made from the special will cease to matter. 

cell c  |  vodacom group  |  mtn group  |  telkom  |  8ta
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2011-06-17 09:45

 
 
 

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