Building a successful community service in public telephony
The supervised payphone business was established in the mid-nineties, when South African law stipulated that GSM network operators were to deploy a set number of lines into under-serviced communities, at specialised rates. Initially these obligations were viewed as onerous and simply a means to obtaining a licence. Yet they resulted in a highly successful business opportunity – Community Service Telephony (CST).
Community Service Telephony (CST) reached a consumer base that would have been unreachable as contracted clients – simultaneously delivering a much needed public telephony service. The “owner operated public payphone” model accelerated both the acceptance of these new services in the community, as well as its proliferation.
Community service telephony also proved very profitable for networks – even at very low call charges – with ARPU being driven by call throughput. Under such low margin business conditions, equipment quality and ease of management becomes crucial. The cost of equipment maintenance, loss of revenue during down times, and dedicated accounting overhead has to be avoided. With this in mind, Psitek’s Adondo and Jembi mobile payphones became the gold standard for community service mobile payphones.
All three GSM networks operators in South Africa have decided to build their CST businesses on Psitek end-user equipment. This proved to be an astute business decision. Vodacom’s obligation was set at 22 000 units, but by the end of 2008, they had overachieved on that target by close to 500%, having deployed in excess of 110 000 units. Similarly both MTN and Cell C had over achieved on their obligations by close to 150% and 180% respectively.
A well located phone shop with five lines, for example, typically experience more than 100 hours of calling per month per phone line. This generates total monthly revenues of US$3,550 with close to US$1,190 of that going to the entrepreneur operating the shop.
As early as March 2001 some 52 million calls were made from community service phones, resulting in some 78 million minutes of call time, and by March 2003 Vodacom delivered more than 90 million minutes per month through 23, 000 active CST phones. In 2003 they boasted annual revenue of US$ 129.5 million from their CST initiatives.