Telecom New Zealand now locking handsets

Forums › Spark New Zealand (including Skinny and BigPipe) › Telecom New Zealand now locking handsets

1 | 2 | 3 | 4

ajw

1971 posts

Uber Geek
+1 received by user: 369

#923136 28-Oct-2013 18:15

ajobbins: Don't see an issue. Especially at it's cheap (obviously subsidised), clearly labelled as locked and unlockable for a pretty low fee.

This differ from days of old where Vodafone used to lock handsets sold on long term contracts and they either couldn't be unlocked for a period of time, or doing so was prohibitively expensive (despite some pretty pathetic subsidies on the handsets).

Wonder what the margins are on handsets.

ajobbins

5053 posts

Uber Geek
+1 received by user: 1280

Trusted

#923140 28-Oct-2013 18:26

ajw: Wonder what the margins are on handsets.

Depends on the handset, but pretty slim these days. Carriers used to have a virtual monopoly on handsets (Especially Telecom in the past with their CDMA and AMPS networks), but now you have some of the manufactures of the big name smartphones (Apple, Samsung, HTC) who are able to squeeze margins because the handsets are in demand, as well as more competition.

With the Vodafone network, you have always been able to bring another GSM, UMTS or LTE capable handset of the right band(s) and connect it to the network. Especially these days when it's easier to get your hands on an imported phone, the carriers aren't able to carry as much margin on their handsets any more.

Twitter: ajobbins

NonprayingMantis

6434 posts

Uber Geek
+1 received by user: 1528

#923146 28-Oct-2013 18:31

ajw:
ajobbins: Don't see an issue. Especially at it's cheap (obviously subsidised), clearly labelled as locked and unlockable for a pretty low fee.

This differ from days of old where Vodafone used to lock handsets sold on long term contracts and they either couldn't be unlocked for a period of time, or doing so was prohibitively expensive (despite some pretty pathetic subsidies on the handsets).

Wonder what the margins are on handsets.

Very low. Telcos have never really made money from selling handsets. They make money when you use a handset on their network.

JimmyH

2899 posts

Uber Geek
+1 received by user: 1554

#923263 28-Oct-2013 21:37

NonprayingMantis:
JimmyH: It's not really the "below cost" reason they are doing it for, it's to try and make it harder for people to move easily between networks so they don't have to compete as hard on price to retain existing customers.

It's anti-competitive behaviour, pure and simple. The Commerce Commission should take a tough line on it.

If telecom was the only place you could buy phones, you might have a point. But they aren't, so you don't.

I think I do, actually.

It's not about whether you can buy handsets elsewhere, that's almost irrelevant. It's about making customers more "sticky", to try and slow down churn and make it that bit harder for customers to move in response to different deals. It's the same reason the telcos stonewalled on number portability until they were made to move - anything they can do to put roadblocks and inconveniences in the way of shifting networks means that customers are less likely to leave when they see a better deal, and it means they don't have to compete as hard on price.

That's why the telcos also push so hard on branding and complex plans. Their nightmare is being relegated to being a dumb pipe that just supplies undifferentiated plain vanilla services (voice/data/text) that are impossible to differentiate in terms of quality or brand-affection - and where customers choose solely on the basis of price, and move rapidly when someone else offers a better deal.

From the consumers standpoint easy movement (unlocked handsets, comparable plans, number portability etc) is vital to keeping the telcos honest and making them compete hard on service and pricing.

The Commerce Commission had it right when it threatened to nuke Vodafone for this, and it should take the same line with Telecom and its Skinny brand.

Number portability has been a godsend to these customers and their lack of loyalty to one provider or another means they’re keeping the telcos honest.

CJbravo

51 posts

Master Geek
+1 received by user: 2

Trusted

#923334 29-Oct-2013 03:19

JimmyH:
NonprayingMantis:
JimmyH: It's not really the "below cost" reason they are doing it for, it's to try and make it harder for people to move easily between networks so they don't have to compete as hard on price to retain existing customers.

It's anti-competitive behaviour, pure and simple. The Commerce Commission should take a tough line on it.

If telecom was the only place you could buy phones, you might have a point. But they aren't, so you don't.

I think I do, actually.

It's not about whether you can buy handsets elsewhere, that's almost irrelevant. It's about making customers more "sticky", to try and slow down churn and make it that bit harder for customers to move in response to different deals. It's the same reason the telcos stonewalled on number portability until they were made to move - anything they can do to put roadblocks and inconveniences in the way of shifting networks means that customers are less likely to leave when they see a better deal, and it means they don't have to compete as hard on price.

That's why the telcos also push so hard on branding and complex plans. Their nightmare is being relegated to being a dumb pipe that just supplies undifferentiated plain vanilla services (voice/data/text) that are impossible to differentiate in terms of quality or brand-affection - and where customers choose solely on the basis of price, and move rapidly when someone else offers a better deal.

From the consumers standpoint easy movement (unlocked handsets, comparable plans, number portability etc) is vital to keeping the telcos honest and making them compete hard on service and pricing.

The Commerce Commission had it right when it threatened to nuke Vodafone for this, and it should take the same line with Telecom and its Skinny brand.

Number portability has been a godsend to these customers and their lack of loyalty to one provider or another means they’re keeping the telcos honest.

I agree with your intent - keeping telcos honest and customer-focused is important - but you're not looking in the right direction.

Yes, telcos don't like churn and want services and products that will make customers sticky (but so do banks, insurance companies, supermarkets, heck even your plumber and mechanic and fish&chip shop). Yes, that was a side-benefit of no number-portability (but let's not forget the technical/infrastructure challenges and process challenges and synchronising all the telcos to do it at the same time as things you can't just wish your way around).

Actually, "making them compete hard on service and pricing" is exactly what they're doing with handset offers like this one. The big thing you're forgetting is that these handsets aren't free; someone has to pay for them. The majority of consumers (Geekzoners excluded) evaluate products based on the up-front cost only; running cost is not usually factored in (think about the people you've observed buying the big plasma TV, the big SUV, the big washing machine, the laser/inkjet printer). So the up-front sticker price is vital, and the way telcos can reduce this is in exchange for a commitment that the customer will continue to use their services for a period of time; they know most people try to keep under their voice/data/txt caps and this gap is where they get to recoup the cost of subsidising the upfront cost of the consumer's shiny new toy. The alternative is people take the subsidised price and then walk across the road to another telco and whack their cheap new phone on prepay, leaving the original telco to try and take them to Small Claims for breach of contract to get their $30 back; that's not fair, right? And if the customer does want to do this, then they can: $30 is what, 2 weeks of SkyTV?

So instead of thinking about "evil telcos trying to lock us in", maybe think of it as "a hire purchase agreement so we can get shiny toys cheaply that we then pay off over time through not using our full call plans". And when you look at it like that, you see the easy alternative: buy your mobile outright, put it on prepay and you're free to choose a telco that offers you the best service (or speed, or coverage, or other non-financial factors that matter to you).

ajw

1971 posts

Uber Geek
+1 received by user: 369

#923373 29-Oct-2013 08:26

As Vfone and 2 degrees now use UMTS 900MHZ in the majority of places for 3G access and 2100MHZ for fill in coverage it seems the majority of dual band 850/2100 telecom handsets would be useless trying to use on competitors networks. And as most people buy handsets to use data the GSM bands are irrelevant. So it seems that Telecom is preventing customers churning to it's subsidiary Skinny and other MVNO's who use the Telecom XT network.

Geekzone

Want to support Geekzone and browse the site without the ads? Subscribe to Geekzone now (monthly, annual and lifetime options).

NonprayingMantis

6434 posts

Uber Geek
+1 received by user: 1528

#923374 29-Oct-2013 08:40

ajw: As Vfone and 2 degrees now use UMTS 900MHZ in the majority of places for 3G access and 2100MHZ for fill in coverage it seems the majority of dual band 850/2100 telecom handsets would be useless trying to use on competitors networks. And as most people buy handsets to use data the GSM bands are irrelevant. So it seems that Telecom is preventing customers churning to it's subsidiary Skinny and other MVNO's who use the Telecom XT network.

they will still work on 2G, which for non-smart phones is fine, (voice and txt)

Bit weird they are doing it on smartphones though, for the exact reason you state.

ajw

1971 posts

Uber Geek
+1 received by user: 369

#923377 29-Oct-2013 08:48

NonprayingMantis:
ajw: As Vfone and 2 degrees now use UMTS 900MHZ in the majority of places for 3G access and 2100MHZ for fill in coverage it seems the majority of dual band 850/2100 telecom handsets would be useless trying to use on competitors networks. And as most people buy handsets to use data the GSM bands are irrelevant. So it seems that Telecom is preventing customers churning to it's subsidiary Skinny and other MVNO's who use the Telecom XT network.

they will still work on 2G, which for non-smart phones is fine, (voice and txt)

Bit weird they are doing it on smartphones though, for the exact reason you state.

I note some of the lower end unlocked 2 degrees phones are at the same price point as the similar specd locked telecom phones here is one example.

http://www.thewarehouse.co.nz/red/catalog/product/2degrees-Huawei-Ascend-Y210-Bundle-Black?SKU=1759875

And I note 2 degrees basic Alcatel handsets were selling for $19 over the long weekend also at the warehouse unlocked.

1 | 2 | 3 | 4