Telkom's new mobile division, 8ta, has not thought through that its “one minute free for every three minutes of calls received” prepaid offering is potentially open to abuse.
About three weeks after its inception, the mobile newcomer may be forced to go back to the drawing board with its most compelling incentive, having admitted it has not considered the abuse scenario.
Yesterday, 8ta's managing executive Amith Maharaj announced on mini-blogging site Twitter that the above promotion is for life for 8ta's first one million prepaid subscribers. This has since been officially confirmed by Telkom spokesperson Pynee Chetty.
However, analysts point out that the impact of the offer has two aspects to it.
Firstly, it will encourage subscribers to receive calls and so Telkom will gain from the mobile termination rate that it charges other operators to transmit calls to a target number on its network. This, the analysts say, will likely provoke a response from the other network operators.
Secondly, the system could be open to potential abuse. One possible scenario painted is that an 8ta subscriber, who is also issued a company phone on another network, will then phone his or her own phone until the monthly limit of 500 free minutes is reached.
Square one?
Spiwe Chireka, an analyst at consultancy firm Frost & Sullivan, says the offer, while creative, will probably provoke a response from the other cellular networks, as they will not want to subsidise Telkom through interconnection rates.
“A million customers is quite a lot of people to have out there with this offer for life. Usually these kinds of offers are time-limited and Telkom has found a way to differentiate itself. All promotions are subject to abuse and so it will be interesting to see what the terms and conditions of use are,” she says.
While Telkom has not officially responded to ITWeb's queries, one of its spokespeople points out that prepaid contracts do not have extensive terms and conditions.
He admitted he would have to go back to Telkom's product development team... “because I don't think we have thought about it. Furthermore, companies should have a code of ethics in place for the use of company equipment and they should be monitoring their calls.”
When Telkom launched 8ta, it was with several incentives to make it attractive to prepaid customers. These include the lowest cellular to landline charges, 50 free SMSes for every five paid SMSes sent, and one free minute for every three minutes of calls received.
The last incentive has generated the most interest throughout the telecommunications sector.
Arthur Goldstuck, MD of research firm World Wide Worx, says it is also part of a strategy to ensure 8ta is taken seriously by the rest of the industry, and to help it meet its ambitious strategy of capturing between 10% and 15% of the mobile market within five years.
Potential headache
However, while the free minute for every three minutes of calls received may seem attractive, it poses a potential headache for companies where telephone calls are central to their business case.
“The offer is creative and brings a different mix to the market,” says Tania Higgins, CEO of independent telecommunications expense management company DataRoom. “Companies will have to be aware of their telecommunications traffic patterns to ensure such abuse does not occur.”
Heidi Gouws, DataRoom national sales manager, points out that the offer could also impact the call centre industry.
Call bliss
“The bliss of now receiving those annoying sales calls on my 8ta phone. Please talk to me for hours about your product that I will never buy, while I rack up my free minutes. Outbound call centre companies paying for these calls and then assuming successful penetration,” she remarks.
Goldstuck points out that abuse of 8ta's offer probably won't be as simple as portrayed above.
“We have seen in the past just how quickly people seek to monetise promotional offers. People have been quick to arbitrage between the various mobile operators who offer certain limited period promotions,” he notes.
Share