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Competition is getting us all converged

Summer is almost here and in an unlikely turn of events, South African telecoms giant Telkom, decided spring day was the day it was going to get all competitive. Business communications is, and always will be, a hotly contested market.

At a recent launch, Telkom Business finally unveiled Telkom Mobile, which must have been the culmination of months of intensive work. Telkom Mobile is clearly focused on business telecommunication users, small and large. The launch of a business mobile product in order to take on the big boys MTN and Vodacom was not actually the real news for me. What was eye opening was the unveiling of a newly competitive, and aggressive, spirit of competitiveness, in the dusty corporate halls of Telkom.

After the profitable but baffling sale of Vodacom, Telkom’s mobile offering 8ta was launched, almost exactly one year ago, to a huge crowd in a Lanseria airport hangar near Johannesburg. The launch was underlined and accompanied by the sounds of a typical Highveld thunderstorm, heralding in a new competitive landscape in mobile telecommunication. 8ta was clearly focused on consumers with packages and devices that spoke directly to the prepaid and mass market consumer.

The thunderstorm which accompanied the launch was portentous, as change was coming. Telkom strategically signed a deal with MTN to ensure complete voice and data coverage for its brand new network. It did not take long for the effect to be felt out on the streets. MTN, Vodacom, and Cell C, all reacted: Pricing, marketing campaigns erupted and offerings all got significantly better for you and I, the consumer. Offerings for business customers, however, remain essentially unchanged.

The big bombshell was reserved for this year, when 8ta unleashed a data offering that completely undercut anything that was currently available. A 10GB package for under R200 per month, was by far the cheapest broadband offering on the market. It even undercut Telkom’s cheapest ADSL offering by a significant margin, and promised speeds up to 21 megabits per second, light years away from the 386 kb entry level offering from Telkom ADSL.

A little known fact about this data offering was that big daddy Telkom was not consulted before it broke, and was ultimately forced to react. It did this in part by giving all its ADSL customers additional free data on their ADSL accounts. There will also be a big revamp of ADSL packages. Great competition, even if it was from within Telkom’s ranks.

It also indicated that 8ta maintained that its network roll out was mature enough, and big enough, to cope with the onslaught of data customers the company now anticipated. Despite my spirited probing, all 8ta managing director Amith Maharaj would tell me, is the company is very happy with the uptake of the data offering, and that its network was hardly noticing the added load.

It is clear that mobile is the new corporate playing ground. A clear indicator of how badly businesses need to stay in touch is the proliferation of data sticks poking out of every laptop, on the tables at coffee shops, and business meetings, outside the office, and in fact inside many offices where Wi-Fi has lagged. The recent meteoric growth of the iPad, and its hunger for data to be useful, as well as the emergence of computing in the cloud, all lead to the clear need for a convergence of communication options. We are all demanding mobile solutions with the cost and convenience of our traditional office communication systems.

There will be plenty of analysis of what the actual Telkom business product offerings are, and they are very compelling for the most part. I am certain that we will see a lot of market reaction from Telkom businesses competitors in the near future, but what truly impressed me, once again, was the new attitude that seems to be taking hold at Telkom. From the top management downward, there is a palpable sense of a fresh new attitude, coupled with true excitement.

I have long maintained that Telkom was a moribund dinosaur of a company, which would need major surgery to swing around. This fresh new approach, aided no doubt by the competitive thinking of 8ta’s management, was long overdue, as the industry in which Telkom is now playing is so dynamic and so fluid.

Dr Brian Armstrong Managing director of Telkom business, clearly understands the new environment and acknowledges that Telkom has made “a few mistakes” in the past, but assures us that they have a clear vision to deliver a converged, fixed and mobile focused company, coupled with cloud services, that is responsive to its customers’ business challenges, and all this combined with very competitive mobile offerings, which will compare well with what the other large mobile, and fixed, telecommunication players offer on the South African scene.

For once Telkom is not the dominant player in this mobile market. With Vodacom and MTN owning the lion’s share of the post-paid, or contract market, and Cell C fighting hard to claim a share as well, Telkom are having to think like the young newcomer to this party, and this thinking, acknowledges Dr Armstrong, is a completely new space for Telkom Business, who have been and are the incumbent player in South Africa.

Having had a good look at its product and service offering it is clear that Telkom business is going directly for the needs of business with lots of Blackberrys, smartphones, and tablets, with data based products dominating. Another clear differentiator for them, is the offering of shared bundles for both voice and data, for example a customer can purchase a number of voice minutes or data megabytes, and share these seamlessly with all their staff, no wasted minutes, or megs, at the end of the month, all with management tools that will once again make the use of these benefits simple for the customer.

It will take time, and lots of delivery before Telkom’s reputation for arrogance, and poor customer service, is changed in the minds of the public. That being said, the powers that be at Telkom are well aware of this, and are actually working very hard to dispel this reputation.

The product offerings from Telkom business are so blindingly obvious, especially the shared bundles for voice and data that it begs the question, why have they not been offered before by the other mobile operators? The simple answer is profit. The other mobile operators have had a fairly cosy relationship competitively, or should I say, have shared more of cooperative environment, till now.

The introduction of 8ta changed the dynamic in the prepaid voice environment, and then went on to reshape competition in the consumer mobile data market; this was also greatly assisted by the aggressive launch of high speed data at attractive prices by Cell C. I am certain that the introduction of a truly well organised and motivated competitor in the business mobility environment will jolt the competitive nature of the market once again.

Competition is always welcome, especially if it comes from a place that it was not expected. Telkom has till now not shown any real competitive spirit and as the incumbent telecommunication operator in South Africa and for many acted with arrogance and complete disregard to the real needs of its customers. It seems that those days are gone as Telkom has realised that it need to get aggressive and competitive to remain relevant, with recent poor financial performance and questionable African investments aside.

Convergence is ultimately here to stay in a real practical sense, and the nature of technology will make it happen faster and faster. In the near future we won’t give a milliseconds thought to how we make a call, or where from. We also will not care how we connect to the private office cloud, or public cloud, otherwise known as the internet.

Data and voice are becoming a vital part of the fabric of the new business environment, and access to both in a seamless and ubiquitous manner will become a key factor in the success of business in the coming decade. If you are in business or running a business, now is the time to look at your options in the mobile and fixed voice and data space, and Telkom has just unveiled some tasty new items for the menu.

Author | Steven Ambrose

Steven Ambrose
Steven Ambrose is a seasoned and experienced journalist, writer, reviewer, and commentator, and is intimately connected to all spheres of the South African media world - both in print and online, as well as TV and radio. As a chartered accountant, he brings with him many years of critical,... More