Friends & Friction: It’s time for the telecoms bullies to cave

2014-03-27 10:00

South African business has been ­crying for more than a decade about the high cost of telecommunications.

The problem is that very few business­people are bold enough to say what they want, how they want it and then put ­money behind it.

Study after study has shown we are among those who pay the most for telecoms in the world. However, unlike e-tolls, the cost of making a phone call or sending an SMS has never become a political issue, even though more people use cellphones than drive cars.

Have you ever seen those miserable ­couples on Valentine’s Day, busy tweeting at a candle-lit dinner table?

Or those attention deficit and hyperactive executives who play with their phones in meetings. ­Expecting them to toyi-toyi against the high costs of telecoms is like expecting ­addicts to protest against high drug prices.

Shareholders of telecoms companies have only one advantage over drug dealers: they are protected by the law.

It would all be fine if this was only about the cost of accessing Facebook and other such niceties, but in reality, the cost of ­telecoms is the cost of modern-day progress.

For example, every time a ­customer swipes a card at a speed point, the retailer has to telephonically communicate with the customer’s bank. It’s like earning royalties every time someone breathes oxygen. It’s a good business.

The SA Foundation, which is an ­association of South Africa’s largest ­corporations and major multinational ­companies, wrote: “Because telecoms is an input into virtually all productive activities, if telecoms prices are higher than their ­[international peer] competitive level, they act as a tax on industry and a drag on ­economic growth.”

As far back as 2007, Business Leadership SA argued for price regulation, saying: “While pockets of dominance remain, [telecoms] prices will not be constrained.

Price regulation becomes an important short-term tool to bring about lower prices.”

It is unprecedented for business to ask for price regulation, but desperate times call for desperate measures. But then, the prepaid market makes the contract market look like a bargain of a lifetime.

Research by ICT Africa found that prepaid mobile prices were cheaper in more than 30 African countries than they were in South ­Africa.

This is downright immoral considering that, firstly, the service provider collects the cash upfront and, unlike in the case of a contract, there is no risk of ­default. In most other sectors, customers get cash discounts because there is no ­additional paperwork. Secondly, prepaid is the only payment package that the poorest can afford.

Regulator Icasa finally did something about this, but MTN took it to court to try and stop it. Both MTN and Vodacom say they are for reducing prices, but this needs to be done in accordance with the law and due process.

Yeah, right. It is ironic that both companies are led by black people who know very well how unjust laws were used in the past to discriminate against them. Charging exorbitant rates is perfectly legal, but it is immoral.

It is a regular practice in business to use the courts to delay justice. As lawyers say: “It is better to have a wealthy client than one with a good case.” MTN can easily use delaying tactics to make this case run on for years.

Enter Cell C, which is trying to make ­society aware of the issue, but its radio ads got drowned out by the noise of the Oscar Pistorius murder trial, Nkandla and the ­general elections jamboree.

­Responding like a big, arrogant champion, MTN bought double-page advertisements ­responding to Cell C’s forgettable ads, with a bold headline that said: “Yes, We’re Guilty.”

The problem is that most people don’t read beyond the headline of an ­advertisement. The trophy goes to Cell C for cleverly making MTN pay at least double to tell South Africa that it is a callous ­capitalist.

MTN and its agencies should have known the first rule of communication: everything is untrue until it is officially denied.

Small but nimble, Cell C quickly re-edited the MTN print advertisement to read: “Dear Cell C, you are right, we are making billions instead of playing a major role in the creation of cut prices, we’d rather fight for our wealth. PS: We’ve never stopped doing the people of South Africa and we never will [sic].”

Telkom and Cell C have outfoxed and ­isolated MTN. Big companies must ­remember that giants don’t trip on ­mountains, but on small stones.

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