Going for the cheapest

By Independent Team

New research reveals changing phone use habits

Call within your network or have several SIM cards and change accordingly. If you must communicate across networks then use SMS. That is the formula most Ugandans a choosing, according to the latest research into their phone habits.

Conducted by Business Monitor International, the “Uganda Telecommunications Report Q1 2010″ says SMS is growing in popularity.

The pattern of usage, however, combined with the pattern of growth in minutes of voice usage, paints an interesting picture of Ugandan mobile habits and indicates just how important prices are to consumers.

It says minutes of use have shot up, but only for calls within the same network.

This is because in their drive to offer their customers the lowest prices, operators tend to discount these calls heavily, and it seems that rather than shell out repeatedly for cross network calls, many mobile users are buying more than one SIM card and using each to call just within its own network.

At the same time, the numbers for cross-network SMS have shot up, indicating that where they do not have multiple SIMs to use for each network, people are using SMS instead of calls, as they can be cheaper.

The report notes that Uganda is yet to feel any strong benefits from the dramatic increase in international bandwidth that East Africa has received in 2009, thanks to the SEACOM and TEAMS cables.

“It took some time for any Ugandan company to actually conclude a connection agreement with either company, but this has eventually been achieved. However, there are still many obstacles to overcome before the true benefits can be felt,” it says.

It says one of the biggest obstacles is internal infrastructure and that the Uganda fibre optic ring project has been delayed numerous times due to infighting and oversight concerns.

The first phase was finally completed, but getting internal data rates improved within the country is obviously going to take time and investment, meaning that prices for data services including broadband will take some time to drop dramatically.

In an overview of the mobile phone market in 2009, the research notes that the first quarter of year saw competition intensify in Uganda, with Orange launching its service in March. By the end of the month it had secured 55,000 subscribers, which was undoubtedly a good result. Its growth did slow in the second quarter, in terms of net additions per month, but it has remained strong, and Orange would appear to be destined to be a serious player in Uganda.

It says Essar, now established in neighbouring Kenya, is also moving in, having gained a stake in Warid in Uganda.

Essar announced in December that it plans to invest up to US$ 318 million in its new Warid acquisitions in Uganda and the Republic of Congo.

It adds that in the past three months, a lot of attention has been paid to the growing mobile banking and payment services market. Zain has released several announcements of new agreements with other organisations, allowing customers to use its ‘Zap’ mobile payment service to pay for a greater range of products and services, such as electricity bills and petrol. MTN has reported excellent uptake for its MTN Money service, and Uganda Telecom (UTL) has also begun offering some similar products.

As the year ended, the Uganda Communications Commission had sought to regulate interconnection fees at fixed and lower rate effective Jan. 1, 2010. The mobile termination rates that vary between Shs100 and Shs181 were to be slashed to a uniform Shs131 for mobiles and Shs125 for landlines.

The move would have made Uganda the third country in Africa, after South Africa and Nigeria, to reduce interconnection rates. It was aimed at making communication cheaper and to protect new entrants from unfavorably competitive pricing practices.

However, the Uganda High Court blocked the telecoms regulator’s plans following a petition by one of the operators, MTN, who opposed it. MTN said the UCC cannot legally impose a rate on the operators.