TXT spam

, posted: 7-Sep-2009 12:04

Righto, seems like you chaps don't approve of the idea that low prices for TXT will equal spam so I thought we should have a chat about it.

Compare the TXT message world with email. The main differences (aside from size restraints) are price and trace-ability.

Price first. The cost of sending an email is hidden from the customer. It's built in to your connection price. This is a good thing in many ways - email is first, and foremost, the single biggest application on the internet. The big push to get internet access in the office begins and ends with "I need email". These days it's a given in most jobs, but it wasn't that long ago that the world was very different.

Email has changed the business world in many ways, most of them for better. It's forced companies to sort out their processes, sort out their communications and has given more journalists lead stories than just about any other single source.

There are downsides though, and spam has to be the single biggest problem.

Spam is insidious stuff. It's nasty. Not only is it unwanted in most cases but it's also a cost to the recipient. If our pipes are so clogged up with spam (and estimates I've seen put it at around 97-99% of all email is spam) imagine how much of a drain on resources that is.

Wikipedia describes the spam problem like this:

Spamming remains economically viable because advertisers have no operating costs byeond the management of their mailing lists and it is difficult to hold senders accountable for their mass mailings.

and:

The costs, such as lost productivity and fraud, are borne by the public and by internet services providers, which have been forced to add extra capacity to cope with the deluge.

and it's true. Plus, there's something terribly invasive about getting spam. I'm over it now but I remember clearly when it first started to arrive in my inbox. I was incensed! This was an invasion of my privacy in ways that junk mail certainly isn't. I quite like junk mail, but hardcore porn spam in my inbox means there's hardcore porn spam hitting the inboxes of kids and that makes me quite ill.

How do you stop spam from becoming a problem? You could charge for each email sent - that would shift the burden/cost of spam from the recipient to the sender. After all, if you value that email enough to hit send maybe you should put your money where your mouth is rather than my money.

But that's going to be hard (if not impossible) to implement after the fact. Nobody wants to pay for email and so we end up paying for spam.

Enter the cellphone.

The next big playground for spammers is the mobile phone. TXT spam is tiny in New Zealand because you pay to send a TXT. Internationally this isn't necessarily the case and the argument against reducing termination rates to zero or near to it isn't one of "monopoly protecting its patch" because TXTs tend to balance each other out - it's about stopping automated bots from spamming your phone.

Here's how it works: in the real world, person to person TXTing is commonplace and mostly balanced. I send you a TXT, you reply. We estimate around 90% or more of all TXTs are replied to.

There's a balance and that's as it should be. Telcos tend to pass each other a cheque that has the same (or very similar) amount on it that the other telco has on their cheque. This holds true no matter what size the telco is - there's a symmetry about it that we can talk about if you want.

Throw an automated spam bot in there, however, and the whole thing falls on its face.

Let's say TXTing is regulated and the regulated price is "bill and keep". Vodafone, Telecom, Two Degrees and the MVNOs can all charge what they like because they get to keep it all without sharing with other operators (never mind that the networks share the cost of transporting that TXT between the two networks equally, only one network will be able to charge you, the customer).

We could set up a "TXT your mates on Telecom all you like for $10/month" or similar proposition and let you loose. We'd make $10/month from you and incur 50% of the cost. Telecom would make no money and still incur 50% of the cost. But they'd probably have a similar plan and the whole thing would balance out, assuming all the users are people.

If, however, you want to annoy all those Telecom customers, you'd set up an automated bot that sends advertising material to every number between (eg) 027 001 001 and 027 999 999 on Monday and again on Tuesday and ... you get the picture.

Cost to the user, zero. Cost to the customer, zero* (*not including annoyance factor at getting TXTs all day and all night). All the cost is borne by the network operators.

In New Zealand, this is of course illegal. The anti-spam legislation makes it a no-no, so you could expect the DIA to jump on anyone who tries it here. But they only have so many staff and so much time and resource.

Interntaionally this is already becoming a big problem. Look at France  (France is the ONLY COUNTRY in the world to regulate TXT messages) and you'll see an increasing concern about TXT spam. India and China both have very low termination rates for TXT and are already wading through TXT spam at a level I would be uncomfortable with.

We already have a solution (the biggest single thing we could do) and I would be concerned if we give it away entirely. Remove the cost and spammers have no reason not to move to the new medium. Then it's a simple techno foot-race between spammers and anti-spammers and we know how that one plays out because we've seen it before, in our in-boxes.

Discuss!



Other related posts:
Of termination rates and regulatory holidays
Minister recommends regulation - Vodafone's response
Vodafone's response to the Commerce Commission's report




Permalink to TXT spam | Add a comment (80 comments) | Main Index




Comment by sbiddle, on 7-Sep-2009 12:21

For $10 now you can already send 2000 SMS's. We don't see a large problem with SMS spam. We're also not seeing Telecom's $10 TXT plans being a significant source of spam either

The unsolicited SMS messages we have received promoting WAP Push services have all been sent from foreign gateways and have only been in small numbers. Ironically your foreign SMS interconnects are BAK (so why is it prepay users have to pay 10c more for international SMS's?) but as of now abuse hasn't occured.

You are NEVER going to offer a plan that offers unlimited SMS why why use the scenario?


Author's note by jointhedebate, on 7-Sep-2009 12:26

Hi Steve,

The commission is considering Bill and Keep for TXT. In that environment we do see TXT spam coming in from overseas. Currently Vodafone has BAK relationships as our default but with a clause that says if in/out rates imbalance beyond a certain point (ie if we start to see a lot of machine-generated TXTs coming in) we will move to a paid model.

That works because when we do see TXT spam coming in (and we do) we can move the sender on to a paid model and it stops. Without that barrier we wouldn't be able to stop it coming in.

Telecom's $10/TXT and ours are both person to person. We don't  sell them to companies wanting to send out massive numbers of TXTs and let's face it, 2000 isn't that many when you're a spammer. Remember the guy in Chch sending 50m email spam a day?

cheers

Paul


Comment by freitasm, on 7-Sep-2009 12:28

But that's only if you guys come up with an unlimited $10 SMS plan to any network - which doesn't make sense. Regulation is not about settingyour consumer prices, but your business to business practices.


There are lots of other things t consider - not only the cost of sending the message itself but the hardware costs involved. It's much easier for operators to stop it - all messages have to come from a handset and SIM card, block those two (IMEI or SIM) and they will have to buy more hardware to send out. While buying a SIM is cheap, buying a modem or handset will cost them more and this will slow down them in the tracks.

In the PC world most spammers use botnets, where PC owners are not aware their machines are spilling spam. This is not practical in the telco world where the phones are not that smart (well, some are but that's another story).

There are other things to consider. I don't think anyone in a good mind condition would ask for zero-rated MTR for SMS. This would work on a duopolistic situation with each incumbemt owning 50% of the market.

If there is to be competition someone - the entrant - will be out because there won't be an instant 1/3 share for this new network. That's where regulation comes in.


Author's note by jointhedebate, on 7-Sep-2009 12:32

I think you're missing the point there, Mauricio. It's not actual customers sending each other TXTs that's the problem... it's the automated spam bots sending via a mobile gateway from anywhere in the world.

At the moment we can bill them rather than using BAK. That stops them cold in their tracks.

But if the CC regulates TXT and says "thou shalt Bill and Keep" we lose that option and we will see TXT spam come in from anywhere in the world.

This isn't about individuals using a TXTing service. It's not about you or I signing up to send lots of TXTs across the network. This is about automated TXT spamming coming into the network from anywhere in the world.

Cheers

Paul


Comment by Novatech, on 7-Sep-2009 12:35

Wouldn't the simple solution be detect and mitigate abuse ?

ie, Customer has sent 450 Txt in the last hour, call the customer or force some kind of capta like response before allowing the customer to send more?

The primary problem with email spam is the unregulated nature of open relays and zombies, when the only gateway is being controled by the network operator technical solutions that could not be applied to email would work here.


Author's note by jointhedebate, on 7-Sep-2009 12:38

Hi Novatech,

but what's the threshold there? Remember when people used to boggle at teenagers sending more than 1,000 TXTs a month? Oh yeah, they still do!

Also, if we move to BAK for this, we'll have no recourse to charge them anything or to cap them.

And again, this isn't about individuals, this is about spammers. So try contacting a robot in Birmingham or Los Angeles or Shanghai and asking them to stop.

Yes we control the gateway but if the CC says "you can't bill them for it" then that's that. We lose the battle. Immediately.


Comment by Keith Humm, on 7-Sep-2009 12:45

A few points. 1. We give out e-mail addys more readily than cellphone numbers 2. E-mail spam is largely sent out from badly managed networks 3. It's pretty damn easy for you guys to monitor spam on mobile networks 4. Even at 1c per message, it's still what, 100x? more expensive than e-mail spam 5. I don't know the technical possibilities of this, but keep international termination rates reasonably high to avoid SPAM from low cost SMS gateway providers. Sure, we'll see a marginal increase in spam - but it's not going to be anything near e-mail. It really does sound like you're clutching at straws...


Comment by sbiddle, on 7-Sep-2009 12:49

I see the Commerce Commission simply enforcing what they told you they were going to do in June.. IMHO I think their proposed prices are a done deal, regardless of what operators may think.

I think the few unknowns are whether they enforce minute+second or second+second pricing. The Commerce Commision have already indicated that second+second billing could be a reality along with regulated MTR cuts. The other unknown is asymmetrical MTRs.


Comment by sbiddle, on 7-Sep-2009 12:50

Just in reference to the commerce commission rates, I don't necessarily agree with all the details in their draft recommendations.

I'm ovbiously aware of the pros and cons..


Comment by Pete, on 7-Sep-2009 12:50

Citation needed!!!! You make a lot of claims in this article and have no references to studies, statistics or indeed an supporting documents or evidence to back up your claims. But let's just make sure I have this right, the reason vodafone sets it's termination charges far above a fair market rate, is not to line it's own pockets, or increase shareholder value but to save us from the evils of spam?... seriously? That sms spam will become a problem from lowering termination rates is not just a baseless claim it is a non-sequiter. No one is suggesting you don't charge at all for sms, the commerce commission are suggesting the current termination rates are grossly out of line with your costs and that you are in effect using them as a form of price fixing. Here is a supporting article to back up my claim that this article nothing more than impassioned ranting rather than a well researched argument on the costs of mobile communications and how they relate to unsolicited communications. http://www.newscientist.com/article/dn17577-paypere-mail-plan-to-beat-spam-and-help-charity.html?DCMP=OTC-rss&nsref=online-news Even better than just suggesting that even a 1¢ price on every email would quickly slow the torrent of email spam to a trickle, it suggests that the 1¢ go to charity rather than a company's pockets! So if somehow you are correct in your assertion that cheaper sms will mean spam sms, I will be happy for you to charge an extra 1¢ that you will then pass on to charity to make sure my phone is blessedly spam free!


Comment by Novatech, on 7-Sep-2009 12:50

I would think that 200/hour would be a good threshold, but some simple analysis of traffic would be able to detect abnormal patterns.

Hmmm, I think you are partially right in that sms should not be *totally* free, but using spam as a "think of the children" argument in this case is weak at best and misleading at worst.


Comment by sbiddle, on 7-Sep-2009 13:05

Even if the commerce commssion did enforce BAK it's highly likely would introduce some form of rule such as payment if disparity rates of over 25% occurstop exactly what you're saying could happen.

They aren't dumb people there...


Comment by stevenz, on 7-Sep-2009 13:19

TXTs are more often than not (I would imagine) received by people we "know".  Maybe it's not practical for people who frequently receive/send messages from/to many dozens (hundreds!?) of people, but what about some sort of white/black/grey list for senders, requiring an acceptance the first time a "new" entity (be it person, SMS service or spambot) sends a message to you? (This would obviously need to be done at TelCo side as the few phones that provide similar functionality wouldn't do it in a standard fashion).

My phone, as with my work email address, is a tool. Unsolicited messages hinder the efficiency of that tool, which at the very least, makes me sad, and at the worst ends up costing money. Spammers will only operate if it is profitable to do so, the simplest measure possible to stop it being so is all that is required (whatever that measure may be). Anything that is more elaborate than that becomes unnecessary expense. As soon as x fee for unlimited TXTs happens, so will the same, charging even a small amount makes a bit dent in the practicality.

At any rate, whatever steps are taken, I certainly look forward to continuing to not have to worry about TXT spam. The horse has already bolted on email spam, hopefully we can keep things locked up tighter on the cellphone front!


Comment by dmw, on 7-Sep-2009 13:34

Bring on charging for email. I'd rather pay 5c per email than subsidise the spammers via my Internet bill.


Comment by simon14, on 7-Sep-2009 13:40

Paul, quick question….
 
If you don’t agree that the ComCom should introduce BAK because of the spamming issues you speak of, do you then agree that the MTR’s for text should at least be lowered to 1c?
 
If it was lowered to 1c, then all your worries about spamming will be gone and consumers will get a better deal.
 
According to your reasoning in your post, this would create a win win for everyone!!
 
So, would Vodaofne be happy with a 1c MTR on text? And if not, why not?


Comment by Paul Brislen, on 7-Sep-2009 13:49

man, you go for a run and everyone posts! So, in sequence: @Keith, 1: email vs cellphone number. Quite right, but there are already people daft enough to give Facebook their cellphone number and at the moment it's not much of a problem but I'd like to keep it that way. 2: It's sent for nefarious purposes and if it works for email they'll try it on with TXT. 3: As it is on a fixed-line network. 4:They're not talking about 1c/TXT. They're talking about BAK which = free to send. 5: The Commerce Commission is talking about Bill and Keep for all TXT, not BAK for national/other for international. This is the danger of regulation - one size does not fit all. @sbiddle - the Commission didn't mention BAK for TXT in its draft from memory. The first I heard about it was at the conference. I too believe the Commission has already made up its mind. I believe (personally this is) that the Commissioner who fronted up on the Sunday TV programme made that clear - she'd already decided. And let's not forget, any threshold set by the Commission would then become T-1 for spammers. Just set the bots to send slightly less and move on. Easy. @Pete, what would you like to know? The French stuff is the result of a google for France SMS spam and the figures on spam numbers are from our regulatory team. Anyone out there who works for an ISP know how much spam they drop on their network? Feel free to chip in. And no, I'm not claiming we're doing this out of the goodness of our (obviously black) hearts... I'm doing this as a cost saving measure. Spam costs money and takes up network space. Simple maths - avoid that and we're all better off. @Novatech see above. No children were harmed in the writing of this blog. @dmw, at that rate we'd make a huge saving and it would all be good. Did I miss anyone? cheers Paul


Author's note by Paul Brislen, on 7-Sep-2009 14:02

Hi Simon,

1c/TXT is based on what, exactly? Our cost for providing the service? Your estimate of what you think it should cost?

My point is, nobody has bothered doing a cost model for NZ at all so all we can do is guess.

I'd fully 100% support the Commerce Commission doing a cost model for New Zealand. Absolutely. But they haven't. They've even backed out of doing a cost-benefit analysis for TXT-TXT or Mobile-Mobile or International-NZ. Instead they've done one cost model for Fixed-Mobile and they've made some errors in there.

It would cost about half a million to work out how much the actual cost is in NZ and I figure it would take about three to six months. Instead we've spent nine months spending millions of dollars on legal fees/time/effort/energy/PowerPoint to get to the position where we have lots of ideas about cost but nobody has actually worked it out.

The Commission itself says a cost model is the world's best practice approach and it will only compare NZ with countries that have done one. Yet it won't do one for us and has instead chosen a model based on the most farcical of approaches:

list nine countries: chose the middle one.

Currently NZ is Israel.

Despite our protestations at this, despite pointing out that the list is inaccurate, despite pointing out that range is so great (4c/min through to 4c/min from memory) that NZ costs could fit anywhere in there, the Commerce Commission won't be reviewing this call or giving us the information we've asked for regarding the three quarters of the industry it hasn't bothered analysing.

So no, I wouldn't blindly accept 1c/min and yes, I would accept a cost model that had some rigour to it. Instead we've got a list of nine countries, pick the middle one.

Is that fair? If not, how would you do it?

cheers

Paul


Comment by Pete, on 7-Sep-2009 14:24

Paul,
What do you mean what do I want to know?.. Please edit post to include your references to the claims you make, as the burden of proof lies upon the claimant.

In particular links to supposed French and Chinese sms spam problems! Links to any kind of statistics linking cost of sms and volume of sms spam.

The only link even slightly related on first results page from googling "france sms spam" was about people being sent premium sms messages that they had to pay for.
This is a totally different topic altogether.


Comment by Keith Humm, on 7-Sep-2009 14:56

Paul,

The point I was trying to get at is that even under BAK, someone still pays for messages. If you want to send them out en masse, you still have to risk the fact that you may get a 1:1 (or higher) reply ratio. In a prepay market this does become an issue, as you can simply walk away from your indebted account - but then as someone else pointed out you have new SIM and hardware costs to content with every time you run out of money and want to spam again.

I hadn't actually thought about the other scenario involving premium-rated MO shortcodes and MSISDNs. What would happen under BAK with a 0c MT, 50c MO code for example? I assume the sender would pay nothing to send from the code, the handset would pay (nothing?) to receive, the sender would pay a cost to receive, while the handset would pay the 50c MO rate to send?

Gets a little complex when dealing with these markets - or would this not change under BAK?


Author's note by jointhedebate, on 7-Sep-2009 15:06

@Keith, sorry if I stuff this up... not sure of the MT and MO terminology (will upskill rapidly).

Under BAK you could (theoretically) sign up your spambot company as a partner (probably through a legitimate telco) and simply start firing out as many TXTs as possible. Your payment to your telco would cover your costs and that relationship might be as simple as a per meg basis.

Today, Vodafone would contact that telco and pull them off BAK and put them on a billed model so we could make sure they pay for each TXT sent, thus ensuring their customer (our spammer) also paid.

Under a pure BAK process, that simply wouldn't happen. Instead, the spammer signs up with the telco, fires as many TXTs as possible and pays the telco. We, the receiving network, have no alternative but to either disconnect the telco (tricky if they're NZ based, less so if they're not but still awkward if we want to be a global player) or simply pass the traffic on to the customer.

Does that make sense? What am I missing here?

cheers

Paul


Comment by langi27, on 7-Sep-2009 15:46

Your argument of spam via mobile is flawed, that is if you want to keep your customers.

A good ISP will block a majority of spam, and the email client usually captures whatever else gets through. The cost of my monthly internet connection has not increased with them adding this feature and the same will be true with the mobile world.

If a mobile phone company is any good they too will ensure their customers get minimal spam regardless of whatever plan they are on.

Your shooting yourself in the foot if you think low txt rates and MTR rates will increase the amount of spam a customer gets.

I think 2 Degrees will be more than happy if Vodafone or Telecom introduce a new charge to receive voice and txt messages. Because from what I've seen and read they want new customers, they know they must see this through without the additional costs.


Comment by langi27, on 7-Sep-2009 15:48

Your argument of spam via mobile is flawed, that is if you want to keep your customers.

A good ISP will block a majority of spam, and the email client usually captures whatever else gets through. The cost of my monthly internet connection has not increased with them adding this feature and the same will be true with the mobile world.

If a mobile phone company is any good they too will ensure their customers get minimal spam regardless of whatever plan they are on.

Your shooting yourself in the foot if you think low txt rates and MTR rates will increase the amount of spam a customer gets.

I think 2 Degrees will be more than happy if Vodafone or Telecom introduce a new charge to receive voice and txt messages. Because from what I've seen and read they want new customers, they know they must see this through without the additional costs.


Author's note by jointhedebate, on 7-Sep-2009 15:53

@ langi27

I think you're missing the point. It's not that we'll introduce an additional fee, it's that your phone will be sent more TXTs than you would like from companies you've never dealt with, offering you products you don't want.

Have a look at the forums on Geekzone. A few weeks back there were plenty of people getting riled because of what they thought were Premium TXT messages being sent without their permission. They weren't - they're a form of TXT Spam and for most of the people in the list that was just as bad.

Cheers

Paul


Comment by freitasm, on 7-Sep-2009 16:05

I don't see the Premium SMS problem Paul. IIRC people were complaining that

a) some (unadvertedly) handed their details to Premium SMS companies by filling a survey on Facebook. Apparently there is a fineprint there that says the survey automatically enrolls you - completely disregarding the requirement of double opt-in that is enforced.

This is not spam. This is still Premium SMS, but using dodgy tactics to get their subescription base.

b) some say they bought Prepay packs and they instantly started receiving Premium SMS. Perhaps the previous owner on that number subscribed to the services and when Vodafone or Telecom recycles the number Premium Services are not deactivated?

Either way this is not SMS spam. This is still Premium SMS services. Paid by the user - like it or not.


Author's note by jointhedebate, on 7-Sep-2009 16:06

@ langi27

I think you're missing the point. It's not that we'll introduce an additional fee, it's that your phone will be sent more TXTs than you would like from companies you've never dealt with, offering you products you don't want.

Have a look at the forums on Geekzone. A few weeks back there were plenty of people getting riled because of what they thought were Premium TXT messages being sent without their permission. They weren't - they're a form of TXT Spam and for most of the people in the list that was just as bad.

Cheers

Paul


Author's note by jointhedebate, on 7-Sep-2009 16:08

Hi Mauricio,

I'm hunting for it myself. This wasn't that thread but another one about service message spam but I can't quite find it.

Basically customers were getting TXTs that weren't TXTs - they're service messages, only instead of them being used as intended, they were trying to sell some dodgy product or other.

There was a lot of outrage about TXTs and spam and some comment about how personal the cellphone is to a person.

I'll find it. It's there somewhere.


Comment by langi27, on 7-Sep-2009 16:11

That is exactly my point, if your any good at what you do then you'll ensure I don't receive these txts.

It's easy enough to block a sender so the 2nd message never gets through, and also should be easy enough to only receive messages from an authorised contact list.

In Australia, the goverment introduced a national wide telemarkter black list, all you had to do was register yourself on the list and Telemarkters had to by law leave you alone.

This could be easily done with mobile numbers.


Author's note by jointhedebate, on 7-Sep-2009 16:18

@ langi27 I think you'll find you're paying for this, one way or another.

Isn't it better to stop it from happening in the first place rather than opening the door to it and then realising how good we had it?

And isn't it great that we can learn from the mistakes we made with email in the first instance?


Comment by sbiddle, on 7-Sep-2009 16:48

@paulbrislen

Here's one of the threads on the WAP Push messages

http://www.geekzone.co.nz/forums.asp?forumid=40&topicid=32628

I think there was another one as well.


Comment by pete, on 7-Sep-2009 16:50

"Isn't it better to stop it from happening in the first place rather than opening the door to it and then realising how good we had it?

And isn't it great that we can learn from the mistakes we made with email in the first instance?"

That's a loaded question, to answer suggests there is definitely going to be a spaSMS problem and that this is the only way to solve it.

Your comparison to email spam is weak at best. One of the biggest issues that plagues email and allows spam is that there is no real verification of sender. This just isn't the case with sms, you can quickly trace who sent a spam sms and terminate their account, or block them at the gates of your network.
Also email is largely free, and therefore any success rate of spam makes it a profitable model. SMS will always have some cost affixed to it and therefore must have a higher success rate to be profitable.

I'm yet to see any links to information supporting your claims that this is a problem in other countries who have BAK or lower MTRs.


Comment by Paul Brislen, on 7-Sep-2009 17:05

Hi Pete,

TXT from an automated source via a third party telco in another country is about as unverifiable as it comes. Sure, we can charge the telco and hope they sort out the spammer, but beyond that...

And just to be clear, the example I'm talking about relies on the Commerce Commission introducing its Bill and Keep model for TXT, not a small cost for sending.

Cheers

Paul


Comment by Michael Moore-Jones, on 7-Sep-2009 17:29

There is no need for movement in prices set by Telco's in NZ. If you compare the average text price in Europe to that in NZ, I'm fairly sure you'll be shocked.

On Txt2000 and similar plans you are paying less than NZ1c a text. In Europe, on the cheapest plan, you pay EUR15c a text for national texts (I'm currently in Spain). International texts cost EUR60c. The exchange rate is currently about EUR48c to NZD1. That means, on the cheapest plan, you are paying at least 30 times the amount we do in NZ.

New Zealand's prices are good for both consumer and company. While I do think this is odd, that Vodafone is putting some of the reason behind not wanting to stop MTR's as wanting to protect consumers from spam, I think MTR's are a fair inclusion of the price we pay. As Mr. Brislen says, it all balances out.

Michael Moore-Jones.


Comment by Paul Brislen, on 7-Sep-2009 18:58

Has my father joined the debate? Oh, wait... you mean me. Sorry. Feel old all of a sudden!

I'm not trying to say this is our only reason for not wanting rates dropped - we've made it clear we think our prices are up there with the best in the OECD (and TXTing in NZ is one of the cheapest TXT rates in the world) but this is one of the arguments against lowering rates to zero (BAK).

I'd hate for us to fix something that's not broken and in the process introduce spam to the cellphone. That would be a very bad idea indeed.

Cheers

Paul


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I can see where Paul is coming from with the spam side of things, but also believe the price needs to be lower....e.g if all Teleco’s where to have for instance $0.09c per msg like 2d I believe this would satisfy a huge number of users having halved the cost of texting while still being “too expensive to be valuable for any spammers”


Comment by Steve M, on 8-Sep-2009 14:18

Paul:
- VF & TEL charge a "wholesale" price to each other of 9.5 cents per text. Obviously this is way way WAY in excess of any reasonable estimate of cost. That's why the Commission has stepped in.
- How can you sit there with a straight face and argue against regulation of SMS when you guys are SO obviously rorting everyone!!??
- The extremity of your monopolistic charging is best illustrated by comparing your "wholesale" rate of 9.5 cents with your retail rates of 0.5 cents.
- How can you possibly justify a "wholesale" rate that is so far in excess of your retail rates!?
- And it's worth noting that your retail rate includes both MO and MT. Whereas the ComCom is only looking at the MT component right now (so by only providing MT, the wholesale costs are significantly lower (half?) for VF than the retail scenario where VF provide both MO and MT).
- I believe that the arguments of the other carriers is that the true cost of sending a text is so low that it may as well be zero.
- As an example the ACCC WIK Consult report did the cost modelling that you're asking for (it took alot longer than the 3-6 months you suggest) and they calculated the cost of an SMS to be $0.0003 per SMS (link to report below, see pages 122 & 137).
- VF in its submissions to the ComCom have argued that the rate charged is largely irrelevant because the traffic between operators is symmetrical. Surely that's a perfect argument for BAK!?!? It's also one of the arguments that VF used to get BAK from the ComCom and TEL when VF got its "Homezone" decision. So it seems that VF is happy for BAK, but only when it suits VF...

Reading all of the posts above, it must be clear to you that nobody believes the VF BS concerns about SPAM.

Why don't you just 'fess up and admit that the real reason you want to charge these exhorbidant rates is to line the greasy pockets of your offshore owners.

And in response to an earlier post of yours - I think you probably do have a black heart. Anyone who promotes something that is so obviously wrong (and so obviously to the detriment of all New Zealanders) does have a black heart. You might argue that you're "just doing your job" - but then again, I'm sure the tabacco executives say the same thing...


WIK Consult report for ACCC
http://www.accc.gov.au/content/item.phtml?itemId=783055&nodeId=1a2eee9394ef3123590dbf874692a13b&fn=Mobile%20termination%20cost%20model%20for%20Australia%20(WIK%20report).pdf


Comment by Steve M, on 8-Sep-2009 14:20

Paul:
- VF & TEL charge a "wholesale" price to each other of 9.5 cents per text. Obviously this is way way WAY in excess of any reasonable estimate of cost. That's why the Commission has stepped in.
- How can you sit there with a straight face and argue against regulation of SMS when you guys are SO obviously rorting everyone!!??
- The extremity of your monopolistic charging is best illustrated by comparing your "wholesale" rate of 9.5 cents with your retail rates of 0.5 cents.
- How can you possibly justify a "wholesale" rate that is so far in excess of your retail rates!?
- And it's worth noting that your retail rate includes both MO and MT. Whereas the ComCom is only looking at the MT component right now (so by only providing MT, the wholesale costs are significantly lower (half?) for VF than the retail scenario where VF provide both MO and MT).
- I believe that the arguments of the other carriers is that the true cost of sending a text is so low that it may as well be zero.
- As an example the ACCC WIK Consult report did the cost modelling that you're asking for (it took alot longer than the 3-6 months you suggest) and they calculated the cost of an SMS to be $0.0003 per SMS (link to report below, see pages 122 & 137).
- VF in its submissions to the ComCom have argued that the rate charged is largely irrelevant because the traffic between operators is symmetrical. Surely that's a perfect argument for BAK!?!? It's also one of the arguments that VF used to get BAK from the ComCom and TEL when VF got its "Homezone" decision. So it seems that VF is happy for BAK, but only when it suits VF...

Reading all of the posts above, it must be clear to you that nobody believes the VF BS concerns about SPAM.

Why don't you just 'fess up and admit that the real reason you want to charge these exhorbidant rates is to line the greasy pockets of your offshore owners.

And in response to an earlier post of yours - I think you probably do have a black heart. Anyone who promotes something that is so obviously wrong (and so obviously to the detriment of all New Zealanders) does have a black heart. You might argue that you're "just doing your job" - but then again, I'm sure the tabacco executives say the same thing...


WIK Consult report for ACCC
http://www.accc.gov.au/content/item.phtml?itemId=783055&nodeId=1a2eee9394ef3123590dbf874692a13b&fn=Mobile%20termination%20cost%20model%20for%20Australia%20(WIK%20report).pdf


Comment by Paul Brislen, on 8-Sep-2009 14:33

Hi Steve,

Personal insults aside, termination rates are not the same as a wholesale rate. That's really where things go awry...

A termination rate is what telcos charge other telcos INSTEAD of charging you, the customer. Our income comes from two sources - customers and other telcos. It could come from customers alone, which is where we're heading, but to date the income has come from both sources.

Why? Because as I said in the first post, both networks involved incur costs yet only the calling network gets any income from the customer. We then share that income between both networks that carry the traffic.

It's not a wholesale rate in the meaning of the term that you give it. We're talking about a two-sided market. I'm happy to explain that as well if you like.

Cheers

Paul


Comment by Steve M, on 8-Sep-2009 14:46

Paul:
- VF & TEL charge a "wholesale" price to each other of 9.5 cents per text. Obviously this is way way WAY in excess of any reasonable estimate of cost. That's why the Commission has stepped in.
- How can you sit there with a straight face and argue against regulation of SMS when you guys are SO obviously rorting everyone!!??
- The extremity of your monopolistic charging is best illustrated by comparing your "wholesale" rate of 9.5 cents with your retail rates of 0.5 cents.
- How can you possibly justify a "wholesale" rate that is so far in excess of your retail rates!?
- And it's worth noting that your retail rate includes both MO and MT. Whereas the ComCom is only looking at the MT component right now (so by only providing MT, the wholesale costs are significantly lower (half?) for VF than the retail scenario where VF provide both MO and MT).
- I believe that the arguments of the other carriers is that the true cost of sending a text is so low that it may as well be zero.
- As an example the ACCC WIK Consult report did the cost modelling that you're asking for (it took alot longer than the 3-6 months you suggest) and they calculated the cost of an SMS to be $0.0003 per SMS (link to report below, see pages 122 & 137).
- VF in its submissions to the ComCom have argued that the rate charged is largely irrelevant because the traffic between operators is symmetrical. Surely that's a perfect argument for BAK!?!? It's also one of the arguments that VF used to get BAK from the ComCom and TEL when VF got its "Homezone" decision. So it seems that VF is happy for BAK, but only when it suits VF...

Reading all of the posts above, it must be clear to you that nobody believes the VF BS concerns about SPAM.

Why don't you just 'fess up and admit that the real reason you want to charge these exhorbidant rates is to line the greasy pockets of your offshore owners.

And in response to an earlier post of yours - I think you probably do have a black heart. Anyone who promotes something that is so obviously wrong (and so obviously to the detriment of all New Zealanders) does have a black heart. You might argue that you're "just doing your job" - but then again, I'm sure the tabacco executives say the same thing...


WIK Consult report for ACCC
http://www.accc.gov.au/content/item.phtml?itemId=783055&nodeId=1a2eee9394ef3123590dbf874692a13b&fn=Mobile%20termination%20cost%20model%20for%20Australia%20(WIK%20report).pdf


Author's note by jointhedebate, on 8-Sep-2009 14:48

Most of the sites on the French situation are in ... French! Zut alors (or similar).

Reuters has a post about China's situation:

but I'll see what else I can find.

Once I can get some translations or similar I'll post again.

Cheers

Paul


Comment by Steve M, on 8-Sep-2009 14:51

Paul:
- VF & TEL charge a "wholesale" price to each other of 9.5 cents per text. Obviously this is way way WAY in excess of any reasonable estimate of cost. That's why the Commission has stepped in.
- How can you sit there with a straight face and argue against regulation of SMS when you guys are SO obviously rorting everyone!!??
- The extremity of your monopolistic charging is best illustrated by comparing your "wholesale" rate of 9.5 cents with your retail rates of 0.5 cents.
- How can you possibly justify a "wholesale" rate that is so far in excess of your retail rates!?
- And it's worth noting that your retail rate includes both MO and MT. Whereas the ComCom is only looking at the MT component right now (so by only providing MT, the wholesale costs are significantly lower (half?) for VF than the retail scenario where VF provide both MO and MT).
- I believe that the arguments of the other carriers is that the true cost of sending a text is so low that it may as well be zero.
- As an example the ACCC WIK Consult report did the cost modelling that you're asking for (it took alot longer than the 3-6 months you suggest) and they calculated the cost of an SMS to be $0.0003 per SMS (link to report below, see pages 122 & 137).
- VF in its submissions to the ComCom have argued that the rate charged is largely irrelevant because the traffic between operators is symmetrical. Surely that's a perfect argument for BAK!?!? It's also one of the arguments that VF used to get BAK from the ComCom and TEL when VF got its "Homezone" decision. So it seems that VF is happy for BAK, but only when it suits VF...

Reading all of the posts above, it must be clear to you that nobody believes the VF BS concerns about SPAM.

Why don't you just 'fess up and admit that the real reason you want to charge these exhorbidant rates is to line the greasy pockets of your offshore owners.

And in response to an earlier post of yours - I think you probably do have a black heart. Anyone who promotes something that is so obviously wrong (and so obviously to the detriment of all New Zealanders) does have a black heart. You might argue that you're "just doing your job" - but then again, I'm sure the tabacco executives say the same thing...


WIK Consult report for ACCC
http://www.accc.gov.au/content/item.phtml?itemId=783055&nodeId=1a2eee9394ef3123590dbf874692a13b&fn=Mobile%20termination%20cost%20model%20for%20Australia%20(WIK%20report).pdf


Comment by NealR, on 8-Sep-2009 15:12

Having a quick look at the ACCC report. The logic used for calculating network cost per SMS is flawed. SMS uses completely different resources from voice and data services and thus the "conversion factor" and "cost per minute" comparisons with voice and data calls are invalid.


Author's note by jointhedebate, on 8-Sep-2009 15:32

Hi Steve,

Personal insults aside, termination rates are not the same as a wholesale rate. That's really where things go awry...

A termination rate is what telcos charge other telcos INSTEAD of charging you, the customer. Our income comes from two sources - customers and other telcos. It could come from customers alone, which is where we're heading, but to date the income has come from both sources.

Why? Because as I said in the first post, both networks involved incur costs yet only the calling network gets any income from the customer. We then share that income between both networks that carry the traffic.

It's not a wholesale rate in the meaning of the term that you give it. We're talking about a two-sided market. I'm happy to explain that as well if you like.

Cheers

Paul


Comment by Steve M, on 8-Sep-2009 15:57

Paul:
- Termination rates are the wholesale rates that Carriers charge to each other. But using your terminology, I have a question for you:

- How can VF justify a termination charge to other Carriers of 9.5 cents per SMS when it offers origination AND termination (i.e. On-Net SMS) in the retail market for 0.5 cents per SMS?

- From what I understand of two-sided markets, the only reason that VF could possibly justify such a scenario is because on one side of the market (the wholesale / termination side), VF is a monopoly and can therefore charge whatever exhorbitant rate it chooses.

- In the retail market (the other side), VF isn't a monopoly, so thankfully VF is subject to competitive pressures and therefore offers a decent rate (0.5 cents per SMS is a decent rate).

- Another related question - how can VF justify a wholesale / termination charge of 9.5 cents per SMS when the ACCC WIK-Consult report (which has done the cost modelling that you ask for), calculates the true cost to be $0.0003 cents per SMS?

- Finally, I stand by my black heart comment. The damage that VF and TEL have done to the New Zealand economy and our people over the years is criminal. People should go to jail for it. They won't - but they should!!


Comment by NealR, on 8-Sep-2009 16:11

Paul,

This will teach you that the NZ public don't want to have a debate they just want a beat up.

Enjoy your day anyway despite being the scourge of the NZ economy. It's all your fault (and mine). Nothing to do with bankers, polititions, people who don't want to work, or people who wear the wrong clothes and need a haircut.

Neal.


Author's note by jointhedebate, on 8-Sep-2009 16:19

@Steve,

In answer to your questions:

1: If we don't charge the other telco to recover costs we'll charge the customer. That's how it works overseas, what makes you think that won't happen here?

2: Not sure how you conclude Vodafone has a monopoly. There are two national networks, one partial network and seven MVNOs. Perhaps for very large definitions of the term "monopoly"

3: If you read the ACCC report on the WIK model the ACCC itself says that it won't be using those numbers ... because they're based on a theoretical model that will never be achievable.

4: I think you've over-stepped the mark if you think we should be jailed for something you disagree with. How silly.

Cheers

Paul


Author's note by jointhedebate, on 8-Sep-2009 16:20

Hi Neal,

At least most of the posters are willing to ask questions and read answers... it's only one or two who won't actually address the issue at hand.

Such is the way I suppose. I thought we might have a discussion instead of a slanging match. For the most part that's working, I think. At least it's risen above a certain other blog where I was told to stop confusing the issue with facts (!)

cheers

Paul


Comment by Steve M, on 8-Sep-2009 16:29

Paul:
- In response to "A termination rate is what telcos charge other telcos INSTEAD of charging you, the customer. Our income comes from two sources - customers and other telcos. It could come from customers alone, which is where we're heading, but to date the income has come from both sources."

- How do you reconcile that statement with VF's submissions that SMS traffic is balanced between the Carriers and therefore the termination rate is irrelevant because the Net Revenues are zero (or very close to it).

- If VF's submissions are to be believed, then the only Net Revenue available to VF is from Retail receipts (since the wholesale / Termination side of the market is supposedly a wash).

- It appears to me that you can see that your VF BS about SPAM isn't working, so you're now trying an additional VF BS scare tactic - the boogey man of having to increase prices...

- I've read most of the transcript from the ComCom Conference - they dealt with this point very well (and VF's paid "independant" Economist squirmed) - the theoretical basis for your self-serving arguments about "having" to increase prices only holds true if you make the really bad assumption that no new firms are likely to enter the market (or up their competitive pressure in the retail market). Obviously with the recent entry of 2D, this doesn't hold true.

- I'd liken VF BS about "having" to increase retail prices as being similar to arguing that the emperor really is wearing clothes

- Why don't you guys face up to it? You've been ripping us off for years, you've finally been exposed and most punters now see the naked truth for what it is.

- Just admit it, fix it (by lowering your rates to something reasoably approximating true cost) and lets all move on.

- Ohh wait - whilst that's in the interest of New Zealanders, it's probably not in the economic best interest of your shareholders? (who your black heart serves) So I guess VF will continue to drag this out for as long as possible - delay, deny, degrade - the 3 D's of an incumbent that Ernie spelt out a few years ago...


Author's note by jointhedebate, on 8-Sep-2009 16:35

Steve,

1: termination rates between mobile to mobile players do balance out for the most part. Fixed to mobile termination mostly goes in Telecom's favour (it's got around what, 85% of the fixed line market).

2: see 1. We're not just talking about TXT-TXT or Mobile-Mobile, but also Fixed-Mobile.

3: Most telcos brought along an economic expert. Are you saing all the others are above reproach because they're not Vodafone spokespeople?

4: oh and now you've decided to get all stupid and personal again. And you were doing so well, too.


Comment by langi27, on 8-Sep-2009 16:45

Paul

Your going around in circles with some of your comments.

Yesterday you said you wouldn't charge the customer

@ langi27

I think you're missing the point. It's not that we'll introduce an additional fee, it's that your phone will be sent more TXTs than you would like from companies you've never dealt with, offering you products you don't want.

Today your saying you will charge the customer

@Steve,

In answer to your questions:

1: If we don't charge the other telco to recover costs we'll charge the customer. That's how it works overseas, what makes you think that won't happen here?

So which is it?

At the end of the day, we want to pay the least amount for sending a TXT message. (possibility the reason your getting hammered in this discussion). If we receive to much spam (which I also highly doubt is likely, but don't have any proof to back that up) then we will also expect you to deal with that too.

Clearly Vodafone and Telecom are in a loose-loose situation. I think it was your boss who said that competition was good for the market, and now the competition is making some valid points VF and Telecom are upset because the competition is about to carve a massive amount of profit off your books. If it was my money then I'd be upset as well, so don't blame you for that.

Aside from that, thanks for fronting up for what is clearly a us verses you discussion.

 


Comment by Steve M, on 8-Sep-2009 16:49

Paul:
- Is it "stupid and personal" to say that VF will act in the economic best interests of its shareholders (even if that's to the detriment of the average kiwi)? Of course not, that's business.

- But that's also why the ComCom exists. Because firms such as VF, if left unchecked, will charge exhorbitant rates (and that does harm the kiwi consumer!).

- Nobody is denying VF's right to make a fair profit.

- And finally, it's obvious that delay is in VF's economic interest. You're overcharging (and getting away with it). Drag things out and keep the gravy train going for as long as possible.

- The ComCom have given VF yet another opportunity to make yet another Undertaking. However, given the above, I doubt that VF will make an honest attempt to use this opportunity to fix this mess.

- Why would you? Delay pays!


Comment by Paul Brislen, on 8-Sep-2009 17:56

Actually, Steve, delay doesn't pay... it costs a lot of money. We have no clarity around investment, we can't go to the banks and ask for cash for the next round of network upgrades beyond what we've already been given because we have no certainty around one of the fundamentals of the business...

and this, based on "list nine countries and pick one, OH MY GOD, that's outRAGEous".

I'd like a little bit more rigour than that before you rip millions of dollars out of the market and give it to a fixed line operator in the hopes they'll pass it on to customers.

Cheers

Paul


Comment by Paul Brislen, on 8-Sep-2009 18:01

@langi27, I think you're mixing up two replies to two different issues.

The first was about whether Vodafone would charge customers to clean out TXT spam. I can't see us doing that.

The second reply was about whether we would charge customers to receive TXTs/Calls if BAK were introduced. Yes, we'd have a look at how to do that. Either through a direct "you've received a TXT, that'll be 20c" charge or via minimum monthly top ups, minimum monthly spends etc...

Currently you can buy a Vodafone handset, put $20 credit on it and you don't have to buy another thing all year. You can receive as many calls/TXTs as you like but you don't have to pay any more.

That's because we receive a fee from the other providers every time you receive that call... Without that fee customers who receive more calls than they make, or who don't make many calls at all, would fall into the uneconomic category and networks would find ways to make them pay for their connections another way.

Cheers

Paul


Comment by Plasmaglow, on 9-Sep-2009 00:32

Simple question Paul:

If I sent a text right now from my mobile to somebody in the US for example are you telling me AT&T (example again) (who use a BAK system) would not charge vodafone anything at all for that text.

I doubt it, and if they charge you as little as 1c for sending that text then this whole discussion is void.

Example:

As you have clarified spamming from within NZ so we can hypothetically rule that out.

So, good 'ol Bob in the US decides to set up a spambot to NZ he sends his first text, vodafone bills AT&T 1c for that text, by then end of the day he had sent a spam SMS to all 5millionish phone in NZ costing AT&T $50,000. I'm fairly sure they are going to do something about it.

Don't expect us to believe the BS that because a country uses BAK for it's NATIONAL person to person SMS that they don't charge international carriers for the sending and recieving of SMS.

So, they can't come from NZ (theoretically), and after any substacial spam from overseas you would have made a pretty penny charging their network provider.

On a lighter note thanks for all your posts on geekzone despite 99% of them end up with you getting flammed at


Author's note by jointhedebate, on 9-Sep-2009 08:51

Hi Plasmaglow,

we have relationships with overseas' providers and we start out with BAK as our standard. Why? Because there aren't many Kiwis who are travelling overseas at any given time in the grand scheme of things.

However, if these providers start sending more traffic than they receive (indicating an automated process or spam) then we move quickly to put them on a payment contract footing.

Cheers

Paul


Comment by Steve M, on 9-Sep-2009 10:07

Paul:
- You haven't answered two of my most fundamental questions:

- How can VF justify a termination charge to other Carriers of 9.5 cents per SMS when it offers origination AND termination (i.e. On-Net SMS) in the retail market for 0.5 cents per SMS?

- And - how can VF justify a wholesale / termination charge of 9.5 cents per SMS when the ACCC WIK-Consult report (which has done the cost modelling that you ask for), calculates the true cost to be $0.0003 cents per SMS?


Author's note by jointhedebate, on 9-Sep-2009 10:10

Steve,

As I said, a termination rate isn't a wholesale rate. You're assuming the retail price consists of costs plus termination rate plus margin. That's not the case.

Termination rates are what we charge other telcos, not retail customers.

Cheers

Paul


Comment by Steve M, on 9-Sep-2009 10:22

Paul:
- You haven't answered the question - rather you've tried to avoid it. I don't blame you, it's a difficult one to answer honestly if you want to maintain any semblance of being reasonable... Even the ComCom finds a direct link between wholesale / termination rates and retail rates. But let's just agree to disagree on that one.

- You've still neglected to attempt answering my other question:

- how can VF justify a wholesale / termination charge of 9.5 cents per SMS when the ACCC WIK-Consult report (which has done the cost modelling that you ask for), calculates the true cost to be $0.0003 cents per SMS?


Author's note by jointhedebate, on 9-Sep-2009 10:27

No, Steve. I have answered your question - it isn't a wholesale rate so your claim that it is doesn't hold up. I realise you don't like the answer, but there it is.

And as I also said, the ACCC itself won't use the WIK report because it's too aggressive, although that's not stopping the ComCom from including it in its list of nine countries.

Also, that cost modelling is done on the Australian market, not the New Zealand market, so my point, as the post says, is that it's not going to give a good reflection of the cost of providing a service in a different country.

Cheers

Paul


Comment by Steve M, on 9-Sep-2009 10:36

Paul:
- I might accept your "but wait, Australia is different!" argument if the difference between your charged rate and the ACCC WIK-Consult calculated rate was minimal.

- However, you are charging a termiation rate that is more than 300 times higher than the estimated true cost (incl. a fair rate of return).

- How can that be seen as anything other than completely outrageous gouging!?

- How can VF possibly justify that!?

- It's a question that you still haven't answered...


Comment by Plasmaglows, on 9-Sep-2009 10:42

"However, if these providers start sending more traffic than they receive (indicating an automated process or spam) then we move quickly to put them on a payment contract footing."
So it's settled then, if someone from overseas starts sending spam to NZ you will start billing their provider who in turn will bill the user, word will get around and problem solved.
End of debate imho


Comment by Paul Brislen, on 9-Sep-2009 11:31

@plasmaglows, yes, that's how it is today. We do that because we can - there are no limits on what we can offer.

Regulate to BAK for TXT and we lose that capability. We won't be allowed to tell them "we'll move you to a billed arrangement if there's an imbalance" because we'll only be allowed to bill and keep.


Comment by Steve M, on 9-Sep-2009 14:09

Paul:
- I'm running late for a lecture, so I'll soon stop pestering you with questions you'd prefer people didn't ask...

- In response to your comment yesterday:
"I think you've over-stepped the mark if you think we should be jailed for something you disagree with. How silly."

- You've completely missed the point.

- I was saying that people at VF and TEL should be jailed because of the damage that they have done to the New Zealand economy and our people over the years.

- Unfortunately, this is another area where New Zealand lags behind much of the world (incl. Australia). In other Countries you would be locked up! :)

- And this time, I have John Key on my side. Even he thinks that Jailtime is a good idea for members of cartels.

Jail good idea for cartels, says Key
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10591405


Comment by Steve M, on 9-Sep-2009 14:11

And by the way - you STILL haven't answered an earlier question of mine:

Paul:
- I might accept your "but wait, Australia is different!" argument if the difference between your charged rate and the ACCC WIK-Consult calculated rate was minimal.

- However, you are charging a termiation rate that is more than 300 times higher than the estimated true cost (incl. a fair rate of return).

- How can that be seen as anything other than completely outrageous gouging!?

- How can VF possibly justify that!?

- It's a question that you still haven't answered...


Author's note by jointhedebate, on 9-Sep-2009 14:18

Hi Steve, nobody (well, nobody but you) is suggesting Vodafone and Telecom have operated a cartel. We're not being investigated, nor prosecuted, for such action because not only is there no evidence of it but we simply aren't a cartel.

Vodafone has invested $3bn in the New Zealand market since buying Bell South. That's in capital investment and doesn't include the money spent just being here (that totals quite a bit more). Why just last year alone we invested $500m in the 3G Extend network.

And I think you'll find Telecom has also invested rather heavily in New Zealand as well. Not only are they building an enormous office across the road worth hundreds of millions but they've also just invested $500m in a new mobile network.

To suggest we don't compete fiercely (do you remember the court action?) and that we don't invest (or that our "lack" of investment somehow damages New Zealand) is just plain daft.

And I've answered that question several times. Use your scroll wheel. On your mouse.

Cheers

Paul


Comment by Steve M, on 9-Sep-2009 20:14

Paul:
- The suggestion that VF & TEL compete fiercely is laughable. Until very recently, you've operated a very cosy Duopoly. Now it looks like 2D is going to upset the apple cart / gravy train and you're both squealing...

- Ernie summed it up well when he likened you both competing to a pillow fight.

- And by the way, no you haven't provided any justification for why VF is charging a termination rate that is more than 300 times higher than the estimated true cost (incl. a fair rate of return).


Author's note by jointhedebate, on 10-Sep-2009 09:18

Last time now, Steve.

WIK's report has been rejected by the ACCC as being unrealistic. This isn't WIK's fault - the parameters they were given to work with require it to be as efficient as possible. But the ACCC has said the model has gone too far and it won't be using it.

So we're not "charging 300 times higher than the estimated true cost". The "estimated true cost" is inaccurate.

cheers

Paul


Comment by Steve M, on 10-Sep-2009 10:55

Paul:
- Even if I accepted that WIK 'got it wrong' (which I don't), I highly doubt that they 'got it wrong' to the tune of underestimating true cost by 300x

- I think it's much more likely that VF's SMS termination charge of 9.5 cents per SMS is a few hundred times greater than the true cost (incl. a fair rate of return).

- Anyway, it all doesn't really matter now. Unfortunately I entered this debate far too late in the process and the opportunity to submit to the ComCom is now over... I guess we're now at a point where it's like waiting for the Jury to come back and deliver their verdict...

- I certainly know what I'm hoping they'll decide. Terminate the rate mate!!! :)


Comment by HamishMacEwan, on 15-Sep-2009 07:34

The whole termination issue is a legacy of postal services, when you didn't pay to receive and there were actual physical costs of delivery.
In the telephony world, we do pay to receive.  How you ask?  By post-pay monthly subscription or the hugely inflated call charges for pre-pay.  After all, if I subscribe to a post-pay service only to receive calls, what is the subscription paying for?  Actual costs would be the trivial maintenance of my number in the system.  The idea that I was receiving calls for "free" would be laughable.  No additional cost, but why should there be with the size of the subscription.  Further, since I pay additional for each outgoing call, the subscription remains to cover incoming calls.
MTR (or termination rates of any kind) is, and always has been, an anti-competitive force and another way to gouge the customer.
FUD from Brislen and their funded charities about spam and cyber-bullying is pathetic.
Spam in the proprietary, controlled world of the duopoly is a myth.  One complaint from a user and the closed system of cellular can ban any spammer.  You know who your customers are don't you Paul, you send them bills.  I'm sure Vodafone/Telecom can do something about unwanted international traffic too.


Comment by Paul Brislen, on 15-Sep-2009 09:32

Hi Hamish,

I think you're assuming TXT spam will follow the same kinds of patterns and usage that TXTs display today. Yes, we know who our personal customers are, but we also have international customers who send TXTs to NZ customers.

Currently they're coming in from individuals but they will come in from software and we can't control that under a pure BAK environment.

It's easier to send spam in a TXT environment than an email world because every cellphone has a number that doesn't change... so if I want to spam everyone in NZ I have to figure out their various email addresses, but if I want to TXT spam everyone all I need to know is what prefix the companies use and then start firing TXTs at the number range from 02x 000 001 through 02x 999 999 (or beyond) and I'll be assured of hitting real live users.

I don't want my phone inbox filled up with spam. When my phone beeps to tell me about an incoming TXT I know it's important and that alone is worth something to me. If it beeps every five seconds I'll just switch TXT off and that'll be a shame.


Comment by Steve M, on 15-Sep-2009 09:58

Paul:
- If the issue that VF is concerned about is SPAM from international carriers, then you have nothing to worry about.

- The ComCom will only declare BAK for SMS between domestic carriers.

- So to address VF BS SPAM concerns, all that needs to happen is for 2D, TEL & VF to get together and agree to work together to enforce the current NZ anti-SPAM law.

- This is something that's in everybody's interest, so this is one issue where I'd expect to see industry co-operation (much like we've seen good industry co-operation on protecting kids from bullies, creeps, etc)

- VF will still be free to structure whatever commercial deals it wants to with international carriers (so you can charge to discourage SPAM from international sources)

- TEL & VF have been very clear about this for a very long time. Your earlier Undertakings only covered Fixed-to-Mobile Calls Originated in New Zealand.

- To suggest anything otherwise is both untrue and completely misleading.


Comment by HamishMacEwan, on 15-Sep-2009 20:01

"Currently they're coming in from individuals but they will come in from software and we can't control that under a pure BAK environment."

Oh, so software doesn't have to use cellphone numbers, the kind you can trivially block?

You're earning your money Paul, but not making any sense.


Comment by Paul Brislen, on 16-Sep-2009 09:04

Hi Hamish,

I'm not sure you understand how spam works. It does exactly that - they send it from accounts that can be disowned or abandoned.

what makes you think TXT spam won't be the same?

Vodafone signs an interconnection agreement with Big Telco in Unnamed Country which then in turn allows Shady ISP to sell services to Mister Spammer who fires off billions of emails and TXTs a year. You tell us you're getting spam, well tell Big Telco, they tell Shady ISP which doesn't really care... but eventually is forced to shut down Mister Spammer, who sets up another account and starts all over again.

Meanwhile your phone's inbox is full of TXT spam and you're howling about how awful it is.

Rinse, repeat.


Comment by Steve M, on 16-Sep-2009 16:31

Paul:
- I think that you're deliberately confusing the issues here.

- The ComCom isn't considering declaring BAK for VF SMS relationships with international carriers.

- The ComCom is only considering BAK for VF SMS relationships with domestic carriers i.e. TEL and 2D

- I've even taken a squiz at VFs Undertakings - in there you're very explicit that it only applies to domestically generated traffic

MOD:

And then Steve started being really annoying so I've deleted the rest... it went something like "I'm so superior I really am and you obviously are a lower life form wah wah wah" but you get the drift.


Comment by Paul Brislen, on 17-Sep-2009 09:31

Steve,

nowhere at the Commission conference did anyone say "we're only looking at BAK for domestic traffic".

Our undertaking was put in before the conference and in it we say we do not want BAK for any of it - something the Commission agreed with in its draft determination.

I'm deleting the rest of your post.


Comment by Steve M, on 17-Sep-2009 11:17

Paul:
- There was nothing offensive or "superior" in my post. You've deleted it because I pointed out a fatal flaw in your argument and I'm guessing that you don't want to address it...

- VF stated "concern" about the ComCom regulation of MTAS is potential SPAM from international carriers.

- My point is that this isn't a valid concern because the ComCom is only looking to declare BAK for SMS between domestic carriers i.e. TEL, 2D and VF.

- The ComCom isn't considering regulating your SMS relationships with international carriers.

- VF will still be free to enter into whatever commercial deals it likes with international carriers (incl. charging for SMS to discourage SPAM).

- If I've misunderstood something and the ComCom is actually looking to regulate your SMS relationships with international carriers, then please point it out to me!


Author's note by jointhedebate, on 17-Sep-2009 12:13

Steve, you need to re-read my answer above.


Comment by Steve M, on 17-Sep-2009 12:58

Paul:
- And the flipside to your non-answer is that nowhere at the Commission conference did anyone say "we're looking at BAK for international SMS traffic".

- Why? Because regulating international SMS relationships is out of scope.

- The ComCom aren't looking to declare BAK for International SMS.

- Therefore, VF "concern" about International SMS SPAM doesn't appear to be valid.

- If I'm wrong, and the ComCom is actually looking to declare BAK for International SMS, then please point it out to me!!

- If you can put up a link or some other hard evidence that the ComCom is looking to declare BAK for VF's international SMS relationships, then I will have a dozen cold beers (of your choice) delivered to you tomorrow.


Author's note by jointhedebate, on 17-Sep-2009 13:16

Steve,

as I said, during the Conference the Commission did not say anything at all about domestic-only TXT being BAK. It refered to TXT and asked several questions about international TXT and BAK which were answered by Paul Partridge.

To quote:

Commissioner: "Could I just focus a little bit on this SMS spam. I direct this at Vodafone because something was raised yesterday. You submitted about the concern that reduced SMS termination rates could increase the risk of spam SMS. This concern was reiterated by Russell Stanners in his opening statement yesterday, Paul Partridge I believe also commented on the issue of spam SMS in relation to the international interconnection. Do you have evidence of situations where spam SMS has become an issue internationally, or that is a current issue in New Zealand? And if it is in this domestic market wouldn't it be prevented by the Unsolicited Electronic Messages Act? And if not are there other methods you could use to mitigate the risk of spam SMS?

It's about page 150 onward on Day Two (linked to above) and there's quite a discussion on it all. There was more on Day One but I think that spells it out.

The Commission was asking about BAK for TXT full stop. Not BAK for Domestic only or BAK for International only but BAK for TXT. As I said.

You can send the beer to V.Nue, 20 Viaduct Harbour Ave, Auckland. I prefer Epic Beer, thanks.


Comment by Steve M, on 17-Sep-2009 14:11

Paul:
- Not so fast. The quote that you give is the ComCom asking VF if they had any international examples of SMS SPAM being a real issue i.e. can you point to this happening in another country?

- International SMS was only spoken about in the context of "VF already provides SMS to the vast majority of its international partners on a BAK basis" - with a context of "so why not with domestic partners?"

- To help close this issue, I've found the following in the ComCom Draft Report:

Relevant markets
The Commission's preliminary view is that the relevant markets for the purposes of the MTAS Investigation are:

the national wholesale market for mobile termination access services on each mobile network (the ‘wholesale MTAS market');

the national retail market for mobile services, including MTM calling, SMS, multi-media-message-service (‘MMS') and data services (the ‘retail mobile services market'); and

the national retail market for FTM and toll call services (the ‘retail FTM/tolls market').


So it should be very clear that the ComCom is only looking at declaring BAK for domestic SMS and they're not considerig BAK for international SMS.

Epic is a fine choice of beer - but they're not being delivered to you just yet... :)


Above quote is from Pg 11-12 of Draft Report:
http://www.comcom.govt.nz//IndustryRegulation/Telecommunications/Investigations/MobiletoMobileTermination/ContentFiles/Documents/Final%20draft%20MTAS%20Report%20-%20public%20version%20(with%20links).pdf


Comment by jointhedebate, on 17-Sep-2009 16:00

Hi Steve,you said:"The ComCom will only declare BAK for SMS between domestic carriers."I'm saying I saw no evidence of that at the Conference (which is where I first heard of BAK being proposed for TXT).

At the Conference the Commission talked about BAK for TXT and made no distinction of international or domestic.Now you're saying the Commission discussed it in its draft determination - and yes, it did. But it also said in the draft that it wasn't looking at BAK as an option.

The Conference followed the draft determination and brought BAK back into play as an option for TXT only. And again, no mention was made about limiting it to domestic traffic only.

In fact, the Commission specifically spoke about international TXTs in the link and reference I provided which says to me they are indeed thinking about the effects of BAK on international TXTs.

I prefer the IPA to the draught, by the way. ;-)

Sorry - posted this days ago. Don't know why it didn't show!


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Paul Brislen
Auckland
New Zealand


You’ll have heard about mobile termination rates and how the Commerce Commission is investigating whether or not to regulate them. But what is a mobile termination rate, how does it work and why is it so important?

In this blog, we’ll try to answer your questions, tell you a bit about what we think and keep you up to date with the Commerce Commission and its process.


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