Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News
      Post Office on the brink of collapse

      Post Office on the brink of collapse

      13 March 2026
      New policy direction targets South Africa's municipal broadband logjam - Solly Malatsi

      New policy direction targets South Africa’s municipal broadband logjam

      13 March 2026
      How electronic warfare is threatening ships and their crews

      How electronic warfare is threatening ships and their crews

      13 March 2026
      Rand slumps for second week

      Rand slumps for second week

      13 March 2026
      Parliament opens nominations for Icasa council seats

      Parliament opens nominations for Icasa council seats

      13 March 2026
    • World
      Musk launches Macrohard in cheeky nod to Microsoft - Elon Musk

      Musk launches Macrohard in cheeky nod to Microsoft

      12 March 2026
      Europe is building an alternative to Microsoft Office

      Europe is building an alternative to Microsoft Office

      11 March 2026
      Microsoft bets on Anthropic as it loosens ties with OpenAI

      Microsoft bets on Anthropic as it loosens ties with OpenAI

      10 March 2026
      World hit by worst oil shock since the 1970s

      World hit by worst oil shock since the 1970s

      9 March 2026
      iStore prices MacBook Neo at R11 999 in South Africa

      Apple debuts MacBook Neo to challenge Windows PCs, Chromebooks

      5 March 2026
    • In-depth
      The last generation of coders

      The last generation of coders

      18 February 2026
      Sentech is in dire straits

      Sentech is in dire straits

      10 February 2026
      How liberalisation is rewiring South Africa's power sector

      How liberalisation is rewiring South Africa’s power sector

      21 January 2026
      The top-performing South African tech shares of 2025

      The top-performing South African tech shares of 2025

      12 January 2026
      Digital authoritarianism grows as African states normalise internet blackouts

      Digital authoritarianism grows as African states normalise internet blackouts

      19 December 2025
    • TCS
      TCS+ | Vox Kiwi: a wireless solution promising a fibre-like experience - Theo van Zyl

      TCS+ | Vox Kiwi: a wireless solution promising a fibre-like experience

      13 March 2026
      TCS+ | Flipping the narrative on AI in the Global South - Josefin Rosén

      TCS+ | Flipping the narrative on AI in the Global South

      13 March 2026
      TCS | Sink or swim? Antony Makins on how AI is rewriting the rules of work

      TCS | Sink or swim? Antony Makins on how AI is rewriting the rules of work

      5 March 2026
      TCS+ | Bolt ups the ante on platform safety - Simo Kalajdzic

      TCS+ | Bolt ups the ante on platform safety

      4 March 2026
      Watts & Wheels S1E4: 'We drive an electric Uber'

      Watts & Wheels S1E4: ‘We drive an electric Uber’

      10 February 2026
    • Opinion
      South Africa's energy future hinges on getting wheeling right - Aishah Gire

      South Africa’s energy future hinges on getting wheeling right

      10 March 2026
      Hold the doom: the case for a South African comeback - Duncan McLeod

      Apple just dropped a bomb on the Windows world

      5 March 2026
      VC's centre of gravity is shifting - and South Africa is in the frame - Alison Collier

      VC’s centre of gravity is shifting – and South Africa is in the frame

      3 March 2026
      Hold the doom: the case for a South African comeback - Duncan McLeod

      Hold the doom: the case for a South African comeback

      26 February 2026
      The AI fraud crisis your bank is not ready for - Andries Maritz

      The AI fraud crisis your bank is not ready for

      18 February 2026
    • Company Hubs
      • 1Stream
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CambriLearn
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • HOSTAFRICA
      • Incredible Business
      • iONLINE
      • IQbusiness
      • Iris Network Systems
      • LSD Open
      • Mitel
      • NEC XON
      • Netstar
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Vodacom Business
      • Wipro
      • Workday
      • XLink
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Financial services
      • HealthTech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Policy and regulation
      • Public sector
      • Retail and e-commerce
      • Satellite communications
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » Opinion » Peter Walsh » Telecoms firms in a race to the bottom

    Telecoms firms in a race to the bottom

    By Peter Walsh4 August 2015
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp

    peter-walsh-180Having been in the telecommunications industry for 15 years now, it never ceases to amaze me how businesses typically contract with the cellular providers based on the size of the discount on offer.

    This practice has become the normal way of engaging business on tenders and RFPs, is now finally arriving at “ground zero”, where there is no more discount to give.

    Stories abound around key enterprise accounts in Sandton where Vodacom owned the account for two years and then MTN for two years, and then Vodacom, and then MTN — until the margins were so low, all that was left for the service providers was the commission incentive bonuses and the volume breaks paid to the service providers by the networks.

    During this race to the bottom, the one thing that never changed was the noise from the market on how bad the service was. It surprises me that there was this expectation from the businesses that the service provider should give up its margin and improve its service. Unfortunately for the service provider and the businesses, cellphones and 3G cards have become a commodity. And they only have themselves to blame.

    Why to blame? Because the role of the mobile device is so mission critical to business today, and the only value proposition from the networks supplying the dumb pipes still remains: how cheap is your service?

    No partnership, no value proposition and bad service, just a race to the bottom. And more pain for less money. Which has ultimately brought about the demise to the likes of Nashua Mobile and more recently Autopage, leaving the operators — MTN, Vodacom, Cell C and Telkom — increasingly faced with higher levels of frustration from their client bases and lower and lower average revenue per user.

    Nevermind the insatiable demand for bandwidth, no new spectrum becoming available (thanks to the digital migration and the television set-top box debacle) and the fact that although the networks were busy selling on discount and spending the profits, Facebook, WhatsApp and Instagram et al ended up disrupting the market and owning the mobility space. This leaves the networks to sell dumb pipes at paper-thin margins.

    One would have thought that the lessons were learnt.

    But no, there is more. The marketplace continues to be disrupted at pace, and the race to bottom continues. The enterprise expects more and more from its service providers by way of converged voice and data networks and solutions. For their part, service providers have larger and larger product sets but still the same problem. Margins within the telecoms industry are falling and so are service levels (yes, it can get worse). And the salespeople selling these solutions have to work three times harder to make the same commission and have very little incentive to optimise and manage their customers’ telecoms solutions more efficiently.

    share-down-640

    Selling at ever increasingly low margins, service providers are unable to offer their customers the service they require in an increasingly more complex field. It is not that they don’t have the skills, they just don’t have the time or enough resources. Less margin requires more volume to make the same return on investment.

    So, ultimately, the chief information officer, under pressure to increase operational efficiency and empower competitive environments in the new complex digital economy, ends up buying more pain at a lower price.

    The service providers, seemingly devoid of any plan to increase their level of service, or innovate or partner with their customers, continue to sell on lower margins, hoping for higher volumes, while providing average service at best.

    The very industry selling the telecoms infrastructure, products, solutions and services on which businesses are meant to engage with the opportunities brought about by the new digital economy is again without a value proposition and is selling on purely price.

    • Peter Walsh is director at voice and data consultancy CommsCloud
    Follow TechCentral on Google News Add TechCentral as your preferred source on Google


    Autopage Autopage Cellular Cell C CommsCloud MTN Nashua Mobile Peter Walsh Telkom Vodacom
    WhatsApp YouTube
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleVox chops broadband prices
    Next Article How to get a good job in IT in 2015

    Related Posts

    Vodacom claims African first with 254Mbit/s 5G uplink test

    Vodacom claims African first with 254Mbit/s 5G uplink test

    12 March 2026
    Telkom to hike mobile and fixed tariffs from 1 April - Lunga Siyo

    Telkom to hike mobile and fixed tariffs from 1 April

    6 March 2026
    GSMA warns geopolitics could split global mobile standards - Ralph Mupita

    GSMA warns geopolitics could split global mobile standards

    6 March 2026
    Company News
    Households still under big pressure, Altron Fintech index shows

    Households still under big pressure, Altron Fintech index shows

    13 March 2026
    How AI is changing the way we work - Angela Ho, Obsidian Systems

    How AI is changing the way we work

    12 March 2026
    Domains.co.za introduces complete domain protection service

    Domains.co.za introduces complete domain protection service

    12 March 2026
    Opinion
    South Africa's energy future hinges on getting wheeling right - Aishah Gire

    South Africa’s energy future hinges on getting wheeling right

    10 March 2026
    Hold the doom: the case for a South African comeback - Duncan McLeod

    Apple just dropped a bomb on the Windows world

    5 March 2026
    VC's centre of gravity is shifting - and South Africa is in the frame - Alison Collier

    VC’s centre of gravity is shifting – and South Africa is in the frame

    3 March 2026

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Latest Posts
    Post Office on the brink of collapse

    Post Office on the brink of collapse

    13 March 2026
    New policy direction targets South Africa's municipal broadband logjam - Solly Malatsi

    New policy direction targets South Africa’s municipal broadband logjam

    13 March 2026
    How electronic warfare is threatening ships and their crews

    How electronic warfare is threatening ships and their crews

    13 March 2026
    Rand slumps for second week

    Rand slumps for second week

    13 March 2026
    © 2009 - 2026 NewsCentral Media
    • Cookie policy (ZA)
    • TechCentral – privacy and Popia

    Type above and press Enter to search. Press Esc to cancel.

    Manage consent

    TechCentral uses cookies to enhance its offerings. Consenting to these technologies allows us to serve you better. Not consenting or withdrawing consent may adversely affect certain features and functions of the website.

    Functional Always active
    The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
    Preferences
    The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
    Statistics
    The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
    Marketing
    The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
    • Manage options
    • Manage services
    • Manage {vendor_count} vendors
    • Read more about these purposes
    View preferences
    • {title}
    • {title}
    • {title}