MTN's seemingly stupid LTE pricing strategy

Apparently MTN is charging its contract users an extra R39 each month for access to its LTE service. This access charge seems to be an add-on like data bundles and itemised billing and it is something Telkom executives would come up with as a Good Idea because it adds another convenient revenue stream. It doesn’t matter that it just insults its customers and ignores a much simpler and more effective option: reduce data charges and open access to the LTE service up to all users, at no extra cost.

This is a bit radical so I’ll explain my thinking (formed in the absence of any sense of MTN’s costs, margins or any possible insight into MTN’s economics). It’s a pretty simple idea, really. What MTN does is it reduces its data costs like its competitors have been doing, for starters. It then allows any device that can access the LTE service to do so at no extra cost. Consider what this offers customers: a fast data service that you can use anywhere and at lower prices that MTN currently offers. As the cost of mobile data moves closer to other broadband options it becomes worthwhile using mobile broadband more often.

We are already using 8ta’s mobile broadband at my office instead of Telkom’s ADSL access. I disabled ADSL access on my landline and reduced my Afrihost data bundle solely for home use (I had 120GB each month, capped, and shared between home and office). I may pay a little more each month for data access at my office but it is faster than Telkom and Afrihost ever offered us and is more reliable.

Our MTN coverage at the office is even better but there is no chance I can use MTN’s 3G for work data consumption because it is so expensive relative to its competitors. If MTN data cost what I pay 8ta or Cell C and I had LTE access available, it would be even better. Would probably spend even more on data with MTN each month and that is the point. A lot of other people probably would do and that extra cost would almost certainly be more than the stingy R39 MTN is charging just for access to its high priced data service. That probably sounds like an awesome idea but it is a short term gain at the expense of its customers who are probably also exploring competitors’ cheaper alternatives.

In other words, MTN’s pricing strategy is just stupid and is a metaphorical giant middle finger to its customers. Good job Telkom, sorry, I mean, MTN.