Telecoms Promotions And Lotteries: Matters Arising

telecommunications promotions

Yesterday, the news broke of the banning of all telecoms operators in the country from running promotions and lotteries by the Nigerian Communications Commission (NCC). Telecoms operators in Nigeria have become notorious for running crazy promos and lottery schemes that one almost begins to wonder if they were issued licences to run casinos or to run telecoms services.

Everywhere you turn, there is one crazy promo or lottery being executed on the telecoms networks. And these promos have contributed in no small measure to the terrible quality of service being experienced on the networks. From the NCC’s directive are key pointers to this. Here:

i. In due regard to the afore-mentioned responsibilities therefore and having observed that these promotions have increased the number of minutes available to subscribers for use within a limited period of time thereby creating congestion in the networks as subscribers try to use up the available minutes within the stipulated time.

iii. That termination of calls were becoming increasingly difficult from one network to another and overall consumer experience on the networks has become very poor thereby making it extremely difficult for subscribers to make calls successfully.

Average revenue Per User Dropping

Make no mistake about it: the emergence of these lotteries and promos springs from one thing – the networks are making less money from each subscriber, and are trying to compel you and I to spend more. That is it in layman’s terms. But rather than offer you services that you really need, they dangle mouthwatering incentives. You know – Win An Airplane; Win a Country; Own The Moon, and other such idiotic concepts.

Of course, the average consumer not being savvy, the networks spin gold from these promos. Everyday, my line is inundated with text messages from Glo enticing me to enter a lottery for a Toyota Yaris, a motorbike or N12 million naira. It is a similar story on my wife’s Airtel line.

Then, we have the less garish promos that offer you double your used airtime per day or per recharge. The intent is the same: to generate more income for the operators without offering you the services that you need.

An Early Warning

As a people, we are an odd mix. We want good things, but we often want them at no cost. I don’t know what to make of that. Good cars cost more. I own a car. It is “good” in the general sense, but I know that if I want a more comfortable or higher performing car, I shall have to spend more both to purchase and to maintain it. Good phones cost more. Even good food costs more. The economics are plain for all to see. But when it comes to telecoms services, we expect rock solid performance for next to nothing. Like I have said many times before, we keep paying for it and we will keep paying for it if things do not change. The telecoms operators are in business and must run profitably. If they find it difficult to do so, they will go burst, and we can all crawl back to our pre-2001 caves.

Perhaps many of us have no idea how really bad things are on ground. I see naively optimistic people on Facebook and Twitter mouthing off about things getting better, and I am not amused. If we want things to get better, we must first acknowledge the gravity of the problem at hand and then make hard choices. Really hard choices. We have watched the banking industry spin and crash. We might just see the same happen in telecoms.

The CDMA guys are effectively dead and buried. Do not be fooled in thinking that all is well and that it will never happen on the GSM front. We might just be heading for a telecoms ice age.

Stupid Price Wars

I will come back to this, though many subscribers do not want to hear it – many of these promos are all part of the raging price war. In simple terms, rather than compete on value, the telcos are brawling to give the impression that they are offering the lowest tariffs without really offering lower tariffs. But as the NCC rightly stated in the ban statement, these promos and lotteries do more harm then good to the consumer while the telcos smile to the bank. For the consumer, it is a case of being penny wise and pound foolish.

Just yesterday, in the article titled, When EasyBlaze Turns Snail Crawl, I repeated my call for competition based on value. As usual, certain people kicked against it and attempted to twist my words. Someone said, “Your position seems to suggest that broadband ought to be a premium service which is not a good thing.”

Of course, that isn’t what I said, but then everyone is entitled to their opinion of what I say. Paint my position however you will, it is based on common and proven business sense. Any competition based on anything other than value is bound to fail. And cost being commensurate with value is no strange idea. All the GSM telcos currently offer 3G broadband, and all of them fail woefully at delivering the real stuff. What we get is mostly the adulterated thing. If one of them can offer greater value than the others, then it will be able to markup its tariffs to sustain the quality of service. Everyone would still have access to broadband, but at different price points, and at different value points. On the contrary, what all the telcos are doing now is taking the short cut to making money. Subscribers get freebies or near uniform tariffs, but everything is a mess. On every network, calls drop more often, and don’t even go through many times. Internet connections flounder. We waste money. We burn time (something that cannot be restored once gone).

Out of the four operational GSM operators all fighting to entice subscribers with freebies and lower costs, would it really hurt that bad should one of them decide to play different and give the country a real treat? Just one operator shooting for rock solid performance, but with tariffs a little higher than what the competition offers? No; I doubt that it would. And I am certain that there are enough individuals and businesses who need that level of reliability and are willing to pay for it. Then, we would have real competition. Right now, what we have is an open, colourless, shabby, noisy telecoms market with no real differentiation.

Trickle Down Effect

As with all things technology, should real competition based on value take off here, with some operators offering rock solid performance even if at higher costs, eventually those tariffs will drop across board, but with the differentiation still in place. For example, the prices of phones regularly drop after launch, but they don’t all drop to the same points. More feature packed phones will still cost more than bare-bones devices. Better performing devices will generally cost more than lower value ones. That is differentiation. That is competition.

Bread is a staple food. We almost all eat bread. Yet not all bread costs the same. There is “Agege bread” at the lowest level (and I am a fan!), and then there are the branded sliced bread products (which I do not particularly like). For the more exotic, there is Sweet bean Bread, Coconut bread (and these two are favourites of mine), and a long list of other differentiated bread products. My argument is that simple. Broadband is broadband, but there can be differentiation. We get to choose from a variety based on several differing factors.

I will repeat it: it is insanity for all the networks operators to keep doing the same thing and aping one another, and expecting different results. It is certainly more insane of subscribers to expect anything different under the current environment of lack of differentiation.

Parting Shot

The NCC ban is most welcome. These fellows running telecoms networks should go back to focusing on what they were licensed to do. At the moment, I won’t be surprised to find that our telecoms operators have more staff manning their lotteries and promos than network engineers and technical staff. It is a sham. NCC should go beyond just this incidence to make rules that ensure that these sort of promos never see the light of day again. Ever.

In the meantime, dear telecoms operator, stop taking me for a fool. I do not want to win an airplane. I do not want to fly to Dubai. What I do want are telecommunications services that I can use and depend on from day to day. Find a way to deliver those to me or get out of the kitchen.

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