Second-tier telcos are coming in to their own in South Africa as businesses seek simple, convenient and cost-effective solutions to all their telecommunications needs.
That’s the view of Graeme Victor, CEO of voice-based telecommunications solutions company Du Pont Telecoms, who says while the easing of the telecoms regulatory environment has heralded greater competition in the telecoms market, it has also increased the complexities faced by businesses when choosing telco service providers and solutions.
“The days when all a business needed – and could obtain – was a switchboard per branch, some landlines and a contract with a mobile network operator are over,” he says.
“Today, businesses have to contend with an array of technologies ranging from VoIP to Least Cost Routing, as well as a bewildering assortment of bundles and options offered by the Tier One network providers. All this makes it extremely difficult for the average business to compare costs and services and to choose the solution that best fits its requirements,” he says.
This is where the Tier Two Telcos come into their own. These operators do not own their own mobile spectrum; nor do they have their own network infrastructure. Instead, they have business arrangements with traditional Tier One network operators to buy minutes of use (MOU) for sale to their own customers.
This makes it relatively simple for the Tier Two Telco to integrate various services that are provided by the fixed and mobile Tier One Telcos, and to provide these to the business in the way that best suits its needs.
“Rather than purchasing and implementing complex solutions to deal with their fixed and mobile telecoms requirements, businesses are increasingly outsourcing all their telecoms needs to a single Tier Two supplier from whom they effectively purchase minutes – or, in Du Pont’s case, seconds.
“This allows us to quickly pass on to customers any savings that may arise from, for example, a drop in interconnect rates,” Victor says and points out that benefiting from such savings is not always easy for individual subscribers to a Tier One supplier.
For example, rather than reduce the cost of their existing business contract bundles – and so reduce their turnover – mobile networks have simply started to bundle more “free minutes” into their existing call packages. With so many businesses and high-volume contract users already wasting a high proportion of their “free minutes”, the availability of even more “free minutes” is likely tp exacerbate the wastage problem.
“Tier Two telcos, however, have the flexibility to structure the distribution of these minutes in ways that will ensure as much of the benefit as possible reaches the customer.
“In addition, once the so-called last mile from an exchange to one’s business is opened to competition, Tier Two telcos will be even better positioned to negotiate savings and pass these on to businesses,” Victor says.