Geekzone: technology news, blogs, forums
Guest
Welcome Guest.
You haven't logged in yet. If you don't have an account you can register now.
Vodafone’s price rise
Posted on 7-Jan-2015 08:30 by Bill Bennett | Tags Filed under: Articles


Vodafone will raise the price of most fixed line plans by $4 a month from next month. It says the price rise will affect about 300,000 customers.

The price rise follows the Commerce Commission draft decision over the price lines company Chorus can charge telcos to use its copper network.

Spark announced a similar price rise last month. So did CallPlus, which owns the Slingshot and Orcon brands. Other service providers are preparing similar price hikes.

The difference at Vodafone is that the price rises will also affect customers on the company’s cable network in parts of Wellington and Christchurch. Vodafone owns the network so it doesn’t need to pay Chorus to service cable customers.

Critics question Vodafone’s decision to raise prices on its unregulated network. The company could, but hasn’t, argue that the Commerce Commission ruling reset the market value of a connection and it is only responding to competitive forces.

If the price rise on the cable network proves unjustified, you can expect to see Vodafone customers decamp for other service providers. There are plenty of alternatives to choose from.

And that’s the problem: New Zealand’s telecommunications sector is fiercely competitive.

It’s also barely profitable. Margins across the industry are wafer thin. Vodafone made a loss last year of $28 million on about $2 billion in revenue. 2degrees lost $36 million on $350 million revenue. Spark is profitable, it made $460 million on revenue of $3.6 billion, but much of the surplus is down to the company’s fixed line phone business which is steadily shrinking year-on-year.

Vodafone and Spark have sacked hundreds of workers in the last year as they struggle to balance the books.

Assuming Vodafone doesn’t lose customers, that $4 a month charge for 300,000 customers works out at around $14 million: that’s half last year’s loss.

One thing is clear. Telcos were overzealous trimming prices during 2014. That was partly because they anticipated a bigger regulated copper line price cut and largely a response to the intense competition. Despite the recent prices rises of roughly five percent, consumers pay less for telecommunications than they did at the end of 2013.

I discuss this price rise on Radio New Zealand Summer Report with Teresa Cowie.


Filed under: News






comments powered by Disqus


Trending now »

Hot discussions in our forums right now:

How much power do you use?
Created by tchart, last reply by Aredwood on 28-May-2017 21:06 (31 replies)
Pages... 2 3


Bombing at Manchester concert, 19 dead
Created by Rikkitic, last reply by Rikkitic on 28-May-2017 19:06 (174 replies)
Pages... 10 11 12


Father banned from watching daughter's netball game: what you think of this?
Created by Rikkitic, last reply by frankv on 25-May-2017 16:29 (136 replies)
Pages... 8 9 10


Tailgaters?
Created by Linuxluver, last reply by reg52nz on 25-May-2017 16:29 (113 replies)
Pages... 6 7 8


The President Of The USA: Donald Trump
Created by TimA, last reply by geekIT on 28-May-2017 13:27 (4370 replies)
Pages... 290 291 292


Tipping? Please no!
Created by BlueShift, last reply by cddt on 27-May-2017 10:10 (104 replies)
Pages... 5 6 7


Fibre 100/20 Mbps plan - should I get this speed
Created by steve2222, last reply by DarkShadow on 28-May-2017 10:14 (18 replies)
Pages... 2


Sony smart TV functions
Created by Rikkitic, last reply by Rikkitic on 28-May-2017 21:25 (17 replies)
Pages... 2