The mobile industry is changing at an exponential rate as new influences shape the way consumer expectations rise and the competition, new and old, pile on advancements such as artificial intelligence, Deloitte’s ‘South Africa Mobile Consumer Survey 2017’ shows.
Deloitte global telecoms, media and entertainment leader Mark Casey explained in a release on Tuesday that the potential to monetise the anticipated data explosion has driven operator investment strategies for many telecommunications operators, and that the competitive intensity has heightened.
Operators, Casey pointed out, have been focused on reaching the underserved markets in rural areas with faster broadband offerings and upgrading to third-generation (3G) and fourth-generation (4G) or long-term evolution (LTE) networks.
Telecommunications operators in South Africa have laid foundations for the roll-out of 4G/LTE networks to about 63% of urban areas and a significant portion to rural areas.
According to the survey, about 37% of rural areas in South Africa now have access to a 4G/LTE network.
Against this background, Deloitte identified four themes that the industry faces, providing consumers and mobile operators a unique guide to the evolving landscape. These are choosing an operator, smartphone use reaching a pinnacle, growth in mobile commerce and device ownership in South Africa.
Casey noted that the quality of the network with respect to Internet provision, the availability of 4G/LTE coverage and usage of a network by family and friends were found to be the key drivers for consumers choosing a mobile operator.
“The game has shifted from having kilobits per second to having gigabits per second”.
Deloitte further found that South African mobile subscribers are looking for cheaper data prices to the extent that large-scale consumer activist movements have formed, such as the recent #DataMustFall and #SocialMediaBlackout campaigns.
Such, and other, campaigns have had some influence on the industry to lower data tariffs with the greatest impact being in the network technology layer, which is owned either by telecommunicators, vendors or other technology players.
“Based on our findings, we found that the price of data is the most important factor influencing churn. Other factors such as the quality of the network for Internet access, the availability of 4G, the quality of customer service and device price are also important,” Casey added.
The operator landscape, he explained, is facing a difficult challenge of balancing consumer perceptions with respect to the price of data and the need for further network investments, including the anticipated move towards fifth-generation technology and the inevitable need to satisfy the demand for data.
The scenario is not all that gloomy for new smartphones entering the market, as consumers prefer to buy new phones over used ones, Casey added.
The percentage of consumers owning new phones over used phones increased from 78% in 2016, to 86% in 2017, he said.
About one in ten consumers own a second-hand phone, regardless of whether it is a feature phone or smartphone.
The rate of mobile technology evolution is increasing, Casey elaborated, noting that new applications are emerging that attract an increasingly “technologically savvy” South African consumer base.
These factors, along with the mobile operators’ strategy of subsidising phones in the post-paid market, is expected to maintain the dominance in the new phone market over the used one, he said.