South Africa: The cost of calls between networks artificially raises the number of subscriptions

[Business Day] The high cost of cellphone calls to people on other networks artificially inflates the number of users SA appears to have.

There are now a whopping 50-million cellphone SIM cards being used, implying practically everyone has a handset.

But multiple phone numbers are prevalent among technology and telecoms professionals as they know how much cash interconnection fees suck out of their wallets, adding R1,25 a minute to cross-network calls.

The actual number of individual users is closer to 34-million, according to Arthur Goldstuck, MD of research house World Wide Worx. The basic figure of 50-million active SIM cards “gives the impression that every South African has a cellphone, but that is obviously not possible”, he said.

“It’s become clear that many pre- paid users have a SIM card for each major network to avoid incurring the interconnection fee charged for calls between networks. The low cost of new SIM cards — as little as 50c for a starter pack — also gives anyone the ability to have more than one number.”

Research by World Wide Worx was conducted for its 2009 annual Mobility study, sponsored by First National Bank (FNB) and Research in Motion (RIM), the group behind the BlackBerry.

One aim was to highlight investment opportunities in mobile technologies by finding out what people were using, said Len Pienaar, CEO of FNB’s mobile and transactional solutions. Cellphones had become the most easily accessible way of offering services to remote areas, and an understanding of cellphone usage and trends was necessary to introduce technologies effectively, he said.

A more in-depth understanding of consumer perceptions and trends was critical so their needs could be met.

The findings confirmed that SA’s cellular market still enjoyed robust growth despite high penetration, said RIM regional director Deon Liebenberg. “It is not only the number of cellular connections that is growing, but also the applications for which subscribers are using their smartphones.”

Costs inflate number of people with cellphones