Rain’s pricing takes 5G war to Vodacom, MTN

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Mobile data-only network operator Rain’s pricing on 5G will likely be more attractive to consumers in comparison to Vodacom and MTN.

This is according to analysts responding to Rain’s launch of its 5G offering in Cape Town on Friday.

The Cape Town launch comes after the company in September last year activated Africa’s first commercial 5G network in Johannesburg and Pretoria.

In May this year, Vodacom switched on its 5G mobile network in three cities – Johannesburg, Pretoria and Cape Town – with further rollouts planned to other parts of the country.

A month later, MTN followed suit by launching its 5G network, covering areas of Johannesburg and Cape Town, as well as Bloemfontein and Port Elizabeth.

Both Vodacom and MTN used the COVID-19 lockdown emergency spectrum allocated by the telecommunications regulator the Independent Communications Authority of South Africa to launch their 5G networks.

On the other hand, Rain leveraged its 4G data networking infrastructure to build the 5G network in its regulated 3 600MHz spectrum band.

On the Cape Town launch, the company says it offers super-fast unlimited Internet from R699 per month. Two packages are available, both with unlimited data.

The standard package (at R699) caps speeds at 30Mbps and allows a single HD video stream. The premium package, at R999 per month, has no speed limiting and offers multiple HD+ quality streams. Premium users can expect average speeds exceeding 200Mbps, says Rain.

Reasonable monthly bills

Comparing Rain’s offerings to MTN and Vodacom, the analysts point out that although the bigger players have superior infrastructure, pricing will be the biggest bet for Rain in SA’s fledging 5G race.

Arthur Goldstuck, MD of World Wide Worx, says the mobile operators price 5G pretty much along the lines of their mobile access bundles, whereas Rain looks at it from the perspective of primary data access, and is, therefore, able to provide an unlimited data option at a reasonable monthly price, with no cost for the router.

However, he notes Rain’s 5G offering is not intended as a competitor to MTN and Vodacom, but rather complements their services.

“The roaming agreement between Rain and Vodacom illustrates the mutual cooperation that is possible when operators leverage each other’s strengths. When demand on the Vodacom network increased dramatically as we went into lockdown, it was able to offload some of that demand onto Rain’s 4G network,” Goldstuck notes.

“At the same time, Rain is able to reach a far broader customer base by leveraging Vodacom’s extensive network, while not competing directly with it in its core business. As a fixed-wireless provider, Rain is in effect filling a gap where the mobile operators don't have a substantial offering.”

He adds that MTN and Vodacom both have a vast infrastructure that can quite quickly be upgraded to 5G, as well as vast customer bases that can be migrated to 5G once the technology becomes mainstream and moves down the value chain.

“The bottom line is that Rain 5G is a competitive alternative to fibre-to-the-home, whereas MTN and Vodacom 5G are positioned as high-speed, high-capacity mobile access,” says Goldstuck.

Chris Henschel, director at Cellucity, comments that both MTN and Vodacom have far greater coverage areas and a solid 4G infrastructure to underpin a 5G network both in metropolitan areas and rural areas.

Nonetheless, he says, Rain is offering a far more compelling offer with unlimited plans at this stage “but as stated, they cap the speeds to 30Mbps on their standard plans and 200Mbps on their premium plans while MTN and Vodacom are not constraining the speed on their packages at this stage but rather implementing fair usage policies”.

Henschel points out that Rain will be very competitive in the “fixed” 5G space and specifically in the main metropolitan areas.

“While offering uncapped, they do set a speed limit on their packages which may detract from their entry-level offering. Rain also provides a great prepaid offering which will be appealing for a wide variety of users.”

Rain launched its 5G offering in Cape Town on Friday.
Rain launched its 5G offering in Cape Town on Friday.

Capped versus uncapped plans

Telecoms analyst at Africa Analysis, Dobek Pater, adds that Rain offers uncapped plans, while MTN and Vodacom offer capped and uncapped plans.

“MTN and Vodacom have somewhat higher pricing and require contract commitments,” says Pater. “However, Rain’s lower price product has a download speed limit of 30Mbps. While this is somewhat higher than the average 4G speed and comparable to most popular fibre offerings (albeit less stable), and fulfils many household requirements, this is not very different from other products available in the market which are typically also available at a lower price (fixed LTE and fibre)”.

He notes MTN and Vodacom offer 5G as a fixed wireless product (for the home environment) and also as a full mobility product (smartphone). The latter is less relevant at this point, given the limited presence of 5G infrastructure (coverage), Pater says.

Ultimately, he says, the attractiveness of the different operators will depend on the quality of the services they provide and the range of products and services they offer, as well as future pricing.

However, Rain was first to the market with 5G but given the larger operators’ access to greater financial resources and their large current subscriber bases, it will be difficult for Rain to compete directly with them.

“At present, MTN and Vodacom have deployed very limited 5G infrastructure. These are effectively pilots to assess how their 5G networks behave and adjust them where necessary before launching wider deployment.

“One thing to remember is that the current format of 5G being deployed in SA is ‘basic’ mobile broadband network (mainly fixed wireless, but also full mobility), only with higher speeds.”

Meanwhile, independent analyst and researcher Dr Charley Lewis is of the view that competing head-to-head against dominant mobile incumbents is a battle more than an uphill, as Cell C’s dire predicament attests.

“Rain’s data-only, fixed wireless access offering may well be a successful competitive niche, within which it can carve itself good market share against its bigger rivals, who must offer all things to all customers.

“While its mobile rivals are also looking to 5G mobile services, a data-only offering is well-positioned at the affluent end of a COVID-19 market where broadband access to the Internet, to video-conferencing and the cloud is a critical requirement,” Lewis concludes.

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17 Aug
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