Firing a broadside
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
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.