Senin, 26 Juli 2010

Telecom price wars shift to internet

KAMPALA, UGANDA - Internet services are now the latest turf for the telecom company price wars. Internet price wars are not new in Uganda but the heat has now been turned with internet prices dropping significantly.

Telecom companies have been concentrating on the provision of voice services but because of the declining expenditure by customers on airtime, the telecom companies are now finding alternative sources of making money.

"The operating costs remain futile and that's why we are moving more into the provision of data services. Data services especially the internet is the way to go right now," MTN Uganda CEO Themba Khumalo said at a recent event.

The voice calling price wars begun with Warid Telecom offering 24hours of calls for atleast Ushs1500($0.7), this meant atleast Ugandans now started owning more than one sim-card but spending less on airtime.

Orange came up with a similar promotion dubbed Gyekiri but it has not yet picked up in the market. Zain is still currently offering 25 minutes for Ushs500 ($0.2). Uganda Telecom recently introduced free calls for 24 hours at a cost of Ushs1000 ($0.5).

It is promos that have reduced turnovers of some of the telecom and so they had to find alternative ways of making money. For long, UTL and MTN have been providing internet to Ugandans but these services were expensive.

Early this year Orange Telecom Chief executive Phillip Luxcey announced that the telecom company will focus on making more money by being a market leader in the provision of internet and data services. They came with slashed rates whilst offering high speed internet after being hooked to the SEACOM undersea fibre optic cable.

Warid Telecom also came up with internet services at reduced rates as they tried to outwit Orange in this market. Both companies were however coming into the market which UTL had dominated in the provision of Local Area Network (LAN) internet. Their reduced rates however began to eat into the UTL and MTN sales as they both mainly concentrated on the voice services.

The mobile internet modem has been a gadget that more Ugandans are using more often because its price has dropped significantly. By early last year a UTL and MTN modem was atleast over Ushs250, 000($109) but by the end of last week the rates have gone as low as Ushs130,000($57). Zain was the first to reduce the price of its modem to atleast Ushs50,000($22) at the beginning of the year but their cost per kilo byte remained expensive for the regular user.

Orange had its modem at Ushs199,000($87) but this rate has reduced to atleast Ushs70,000($30) for a 3.6mega byte per second connection and Ushs110,000($48) for 7.2mps. The reduction in rates by Orange was because new Internet Service Provider Foris Telecom had launched its internet at a cheaper rate. The Foris Telecom internet brand is known as "In."

Then last week, MTN introduced 3G+ internet and cut its rates for monthly charges to atleast Ushs25,000($11) for the 500MB package. Orange also offers the same price for packages just like MTN.

MTN was previously charging a flat fee of Ushs90,000($39) for its unlimited internet which was usually unreliable during the day. Warid Telecom has also slashed the rates for its modem to Ushs70,000($30) but the marketing of the internet package remains low meaning that Orange, MTN and UTL remain the market leaders in data provision.

Orange and Foris can also carry forward unutilised bandwidth to the next month in case the customer doesn't fully use the whole package. If a customer acquires 1GB from Orange, then they use only 800MB then the balance of 200MB is carried forward to the next month but the customer has to pay for the next month though.

In the newspapers, on TV and other media the adverts are not about new calling rates but are now about the new internet rates. The price wars may be bringing competition among telecom companies but for the customers they mean acquiring cheaper internet at low cost.

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