On a cellphone contract? We have news….

Most Zambians will look at the headline and think, people are on cellphone contracts? Some are. Companies and the well-heeled tend to go for contracts because the mundanity of the USSD is too much.

In developed markets, be they economic or cellular, the contract reigns supreme. It gives the user a device to be paid over an extended period, normally 24 months, with the additional benefit of reduced rates. For the cellphone companies contracts are a brilliant invention, the company makes a reduced profit for the first few months and then reaping legal loyalty and profit for the bulk of the contract duration. Contracts drive network utilisation and cost recover aka profit by reducing the cost to upgrade for the user, meaning company A puts up a 4G network and they offer contract sweeteners to move to 4G handsets. Oh, back to Zambia…ignore the previous paragraph.

In Zambia, contracts are really limited to the corporate segment and the upper-mwambas who prefer to chain themselves to budget-able telecommunications spend. This theory works ok in principle because they do get some free texts (yes, give the customer what they want) and some data as part of their fixed monthly payments. No one cared much about the status quo until Airtel unleached the scythe and freed us from data depression. The context set, what do cellphone contracts offer?

These are not all the bundles available to people who have signed up to contracts with either MTN or Airtel but they do show the proclivity for voice and SMS. So, I will leave those there as mundane informational pieces because voice or SMS are not where the value is lost.

The value of any cellphone and wallet spend is data. The current pay as you go data rates, just in case you crawled out of the SMS-age make us smile. So what are the rates if you are on a contract?

The prices have a magnetic attraction an earlier piece alluded to, so I will not delve into that. What I want to focus on is value, do contracts benefit companies with normal data usage?

The evidence, and an exclamation of YIKES:

*weekly

If you or your staff use data, learn USSD chop-chop, PAYG or scratch card data costs between 20 and 25% contract data. And, with net-neutrality Google treats us the same – there are no fast lanes. The current pricing means your business can buy 1GB PAYG bundle every week for a monthly total of 4GB costing K100.00, or 1GB for K134.00 per month.