Killing Mobile Phone Subsidies In South Africa?

from the but-why? dept

It’s pretty standard practice in the mobile phone industry for the mobile operators to subsidize handset sales (in exchange for which, they lock you into a long contract). There’s nothing wrong with that, as it does help increase adoption by lowering the initial hurdle customers face. It’s just a reasonable business decision. Lots of companies subsidize some aspect of what they’re selling to get people to buy other things. Gaming consoles are subsidized on the expectation that you’ll purchase more games. It is, of course, the classic razor/razorblades marketing strategy. However, for some reason, it gets some people upset. Apparently, some people get so upset that they look to ban the practice. The article doesn’t have the full details, but apparently there’s a proposal in South Africa to ban handset subsidies which seems like the perfect way to slow down mobile phone adoption. If the problem is that people are tied to a single operator for too long — address that issue, rather than pinning it on the subsidies. If the problem is that some handset makers feel left out, that’s a business issue. The channel for handsets is through the operators. If certain vendors are being unfairly cut out, address that issue, rather than the subsidies. There seems like no reasonable explanation to ban subsidies by themselves.

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