Network rivalry brings cost down
FIERCE competition between South Africa's two cellular network operators is pushing down the price of cellphones and pay-as-you-go contracts are helping the market to grow.
That is good news for consumers, who can now be connected to a network within minutes.
Not long ago buyers faced the tedious process of going through credit checks and all the associated bureaucracy in order to get hooked up.
Now it is as easy as making a payment and punching a few codes into a phone.
"Competition between Vodacom and MTN is driving down the price of cellphones," says Neil Tucker, head of the cellphone division of the Connection Group.
"Vodacom has the lion's share of subscribers but MTN is catching up fast. This is forcing both networks to review the prices of handsets and find ways of bringing them down."
Both network operators subsidise the price of new handsets in order to sell contracts that lock subscribers into their services for a year or two. Revenue generated from the subscribers' use of the networks tends to absorb that up-front subsidy.
Tucker says consumers should be aware that cellphones are sold at prices well below what they would cost if no contract was involved.
"Many people have a rude awakening when their cellphones are lost or stolen. Modern cellphones do not cost R49 - most cost in the region of R2 000 and above and it's important to insure the phone if you subscribe to a network under contract."
If a phone is lost or stolen, the contract is still effective and you pay, even though you do not have a handset to connect to it. The networks tend to be accommodating but a replacement phone at a reasonable cost should be found in a hurry to minimise the potential loss.
If the phone is insured, this can be done fairly quickly at minimal expense. If the phone is not insured, a new handset is likely to cost upwards of R1 000.
"Cellphones are expensive because of the sophisticated technology they employ," says Tucker.
"New phones are small and light and have a tremendous amount of battery power. It's best to buy a better phone up front. Although it's more expensive, it will have better features and remain technologically relevant for longer.
"The size of cellphones is now pretty much set - any smaller and you won't be able to hold them properly. Buyers are now looking at the functions a handset provides. Many of the newer devices offer E-mail and Internet connectivity and messages can be beamed to screens on the phones."