Fir­ing a broad­side

Finweek English Edition - - Communication & Technology - BENE­DICT KELLY

THE in­tro­duc­tion of Neo­tel’s con­sumer voice of­fer­ing gave long-suf­fer­ing con­sumers the first sign that the lon­gawaited com­peti­tor to Telkom is on its way. Its new phone – which looks pretty much like a stan­dard Telkom phone if you ig­nore the large an­ten­nae stick­ing out at the back – is Neo­tel’s star player in its war to per­suade South Africans to switch their phone ser­vice from Telkom.

Neo­tel’s en­trylevel ser­vice – at R99/ month – has clearly been priced to un­der­cut the rental peo­ple would pay were they to sub­scribe to Telkom’s ba­sic phone ser­vice. Neo­tel does ex­pect you to pay R599 for the hand­set but says it will give this amount back to the cus­tomer over 24 months in the form of a R25/month sub­sidy.

What was more ex­cit­ing was the sneak peak Neo­tel of­fered jour­nal­ists of its up­com­ing data-only de­vice. One crit­i­cism of Neo­tel’s orig­i­nal con­sumer of­fer­ing was that it was only re­ally suited to a sin­gle user, be­cause it con­nected to a PC through USB. Its new de­vice is more like an ADSL router you can buy from any com­puter store. The dif­fer­ence is that it runs on Neo­tel’s wireless net­work and that means it has two sets of an­ten­nae: one to con­nect it to Neo­tel’s net­work, the other for the WiFi net­work. It also has four Eth­er­net ports and a USB port, giv­ing po­ten­tial cus­tomers a plethora of op­tions for con­nect­ing to the net­work.

While Neo­tel wouldn’t give any de­tails about the pric­ing of its new de­vice’s ser­vices, the fees it’s been of­fer­ing for its Neo­con­nect Prime (the orig­i­nal data of­fer­ing) ser­vice could set off a price war in SA’s data mar­ket. Neo­tel of­fers a 2,5GB cap ser­vice for R399, a 5GB pack­age for R499, a 10GB for R599, a 15GB for R699 and an un­lim­ited ser­vice for R999/month.

While there are cheaper ser­vices at its low-end of­fer­ings, there’s noth­ing on the mar­ket that can cur­rently com­pete with Neo­tel’s high-end ser­vices. By com­par­i­son, one ADSL ISP of­fers a 10GB pack­age on Telkom’s ADSL net­work at R890, which ex­cludes the R124 line rental all ADSL cus­tomers have to pay, even if they don’t want to use the line’s voice com­po­nent. For heavy In­ter­net

users, the im­pli­ca­tion is that once Neo­tel re­leases its router there will be few rea­sons to use any­thing else.

There are down­sides to us­ing Neo­tel’s new ser­vice. The first is that even though it claims to be rolling out new cov­er­age on a daily ba­sis, there are still large swathes of SA’s ma­jor cities that aren’t cov­ered. The ex­act ex­tent is dif­fi­cult to as­cer­tain, as Neo­tel is no­to­ri­ously con­ser­va­tive in its es­ti­ma­tion of which ar­eas have cov­er­age.

The sec­ond pit­fall con­cerns la­tency – the time it takes for a re­quest for in­for­ma­tion to be sent across the net­work and for an an­swer to be re­ceived.

For nor­mal In­ter­net brows­ing that’s not an is­sue. But for some users – such as gamers – it’s a vi­tal as­pect of the ser­vice. As a gen­eral rule, la­tency on wireless net­works is higher than on wired net­works. Con­sid­er­ing many heavy users are also gamers they may be loath to swap their low la­tency ADSL lines for a cheaper (but less ef­fec­tive) wireless ser­vice. What will be most in­ter­est­ing to see is whether Telkom de­cides that

now’s

the time to drop the prices it charges its ISPs for ac­cess to the ADSL net­work, al­low­ing them to in­crease the caps on the ser­vice.

Neo­Con­nect phone

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