Guest Post - Cellular Data Strategies in the South African Space

As a technologist, I like to keep up to date with the data strategies especially the large cellular service providers in South Africa, Vodacom and MTN, has in place driving their data business models.

What is very interesting to see, is the great differences in approach from the two cellular companies. MTN appears to be lagging somewhat with not making even EDGE services available commercially South Africa. Why would you deploy an EDGE solution in a 3G world? Well, the promise of EDGE is that since you are predominantly making use of the GPRS network, wherever you get a GPRS signal, you will be able to get access to the EDGE network. With 3G, you need to deploy a brand new network over and above the existing components. This means that the 3G service will only be available in converted or upgraded locations.

In our tests and trials, this has certainly not been the case. Response times on the EDGE network has been disappointing, to say the most. Yes, it is slightly better than GPRS, but we are still a long way off from 3G. Although the limits do not sound that far removed (200Kbps and 384Kbps), the user experience is quite tangibly different. We were also not always successful in connecting to the EDGE network, even with the GPRS services being available.

MTN seemed to focus their 3G strategy around the availability of 3G handsets in the market. Due to the lack of these 3G handsets from suppliers in the local environment, it made sense to go the EDGE route. EDGE handsets were already available and was increasing, it made a lot of sense; or did it? You see, I can, to a certain extent, understand that MTN would be less risk averse in deploying a 3G network. These networks add huge costs since you physically have to upgrade and improve the existing base stations and infrastructure from an equipment and bandwidth perspective. The expansion into Africa also added significantly to their financial burden, hence the squeeze in the local market from a data perspective and the drive towards EDGE instead of 3G.

The Vodacom approach around data and 3G has been inspiring and I do believe, they have the model right. The Vodacom model is one of unlimited bandwidth. The more available bandwidth you have available, the more bandwidth people will utilize. And they have pitched it at the right level. You see, where MTN was looking at the individual making use of 3G services, Vodacom realized that it was predominantly corporate companies and businesses that were going to snap up the 3G solutions for their mobile workforces, remote offices and Executives that travel not just locally, but abroad as well.

They have aggressively bundled data packages with their 3G solutions for as little as R350 per month. Yes, agreed, for R350 per month, you only get 500MB of data, but for a business user that predominantly lives in Outlook and does some web surfing, this is more than enough. I have yet to break my 3G 500MB barrier, and that is with a lot of surfing and mailing.

Vodacom has also taken it one step further. In the weekend’s edition of the Sunday Times, reference was again made to the intention of Vodacom to include data devices with their data packages. This is a phenomenal concept. Imagine the small business owner that does not necessarily have cash available to purchase a notebook computer to run his life on. These guys will now be able to get a computer, a 3G data connection and possibly a BlackBerry device all in one bundle from Vodacom for a fixed mount monthly. Now this sounds like business to me!!

Following on from the discussions above. How long will it take corporate South Africa to realize that a solution like this is so good, they might just want to outsource all of their mobile communication devices and services to a business partner like Vodacom? The company will control the policies and infrastructure governing what applications will be used, security software be installed and what solutions will be exposed and the partner company will make sure that the data device and channels are available for use. This has to make you think, right?

If MTN want to retain their position in the Corporate segment of the South African Market, they must be able to provide their corporate users with at least the same type of services that their competition are providing. Certainly, why would I pay a similar price for a 200Kbps connection, if I can get a 384Kbps connection? Yes, agreed, footprint and coverage areas are important, but with the significant investment the competition is putting into their data network deployment, I fear, MTN will play catch up for quite some time.

As for Vodacom. From a data perspective, they are certainly the sweethearts of the corporate environment. Their 3G service is fantastic if you can get coverage and the use thereof can provide real benefits. We have however seen that being the leader in a certain segment can be painful and you do pay schooling fees in the process. The Novatel 3G data cards are a case in point.

The innovative way Vodacom is looking at getting people to use their data services exhilarates me and reminds me of the analogy:” If you want to sell coffee beans, give people free coffee machines.”

By Franco Rothner