Knott-Craig drops price bomb on rivals

The operator is slashing the cost of prepaid voice calls, with its CEO, Alan Knott-Craig, calling for further reductions in call termination rates beyond 2013. By Duncan McLeod.

Alan Knott-Craig

Alan Knott-Craig, installed as Cell C’s new CEO on 1 April, is wasting no time in taking the fight to the operator’s bigger rivals, MTN and Vodacom. Just days after cutting the cost of broadband as part of new promotional offers, Cell C has now slashed the cost of prepaid voice calls.

The company is releasing a new prepaid voice product and tariff plan called “99 Cents For Real” that cuts off-network tariffs to 99c/minute with per-second billing from the first second. The rate applies at any time of the day, including peak hours, and will be available from Sunday, 20 May, as part of a new starter pack. Existing prepaid customers can port to the 99c plan.

Update: Within minutes of Cell C announcing its plans, Vodacom had launched its own 99c/minute prepaid plan

Meanwhile, Cell C has also cut the cost of ad hoc prepaid mobile data, with the new rate set at 99c/MB from R2/MB previously. The idea, says Knott-Craig, is to get the mass market used to the idea of using data on their phones.

“This new [voice] tariff gives Cell C’s prepaid customers the best rate in the market, making it — in most cases — even cheaper to call from Cell C to other networks than it is for our competitors’ own prepaid customers to make on-net calls,” says Knott-Craig.

“Customers can phone who they want, when they want. They do not have to worry about peak or off-peak times, to which network the call is being made or in which zone they are. This is by far the most competitive, fair and transparent rate in the market today,” he says.

Significantly, it appears that the new rates undercut post-paid call tariffs for the first time, so it’s fair to assume Cell C plans to cut the voice tariffs for contract customers soon, too. Knott-Craig tells TechCentral that it doesn’t make sense for prepaid rates to be lower than post-paid rates. “We are not finished,” he says. “We are addressing the market in terms of priority.”

Cell C is taking advantage of asymmetry in termination rates — the fees the mobile operators charge each other to carry calls onto their networks. Both Cell C and 8ta enjoy a beneficial arrangement where they pay MTN and Vodacom less than the two bigger operators pay them to carry calls between their networks.

In a move that will no doubt irk MTN and Vodacom, Knott-Craig says he wants the Independent Communications Authority of SA (Icasa) to drop the rates even further beyond the 40c/minute they will reach in March 2013.

“To Icasa, I say: ‘Drop mobile termination rates even further, provide Cell C with asymmetrical rates to help us achieve the scalability we need to compete even more fiercely with the large incumbents, and we will surprise you and them with our response.’”

With “vigilant” competition authorities, Knott-Craig says the “playing fields will be levelled and competition will flourish in the telecoms sector, with Cell C setting the pace”.

“Price is not a strategy, but it sure beats the hell out of strategies based on high prices,” Knott-Craig says.  — (c) 2012 NewsCentral Media

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