New Telecom Skinny Prepay Brand

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#556006 9-Dec-2011 17:34

P1n3apqlExpr3ss: Hmmm, I dont think you guys get my point? Or maybe my thinking is flawed...

Say 2d, VF, XT and Skinny (without sim locks) can offer me a Galaxy S2 for $500 on a 24 month $50/month (lets say 2000 texts, 200mins, 1GB data) contract. At this stage they are all equal and will likely use advertising and brand loyalty to compete, no?

Then Skinny introduces sim locks and as a result of this induced economic benefit they can offer me the same plan except for $400 upfront and $45/month. This would give them an unfair advantage?

If my reasoning is flawed feel free to point out where I've gone wrong

Yes you reasoning is right, but what you are saying is wrong.

If you think about it like this all other players can offer phone XYZ for $200.

Skinny can offer phone XYZ for $100, but as a result of getting the discount you must either stay with skinny for 9 months or pay the unlock fee.

Not anti competitive, as they are offering a discount others can't but it also comes with downsides - like being unable to change providers.

richms

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#556010 9-Dec-2011 17:40

In the past telecom have been able to rely on their being the only network to subsidize handsets, now they are adding this to their budget brand to keep people on it. No different except they do offer an unlock now which was physically impossible on the old network. (other than the dodgey samsung dualmodes and they never worked properly when unlocked anyway)

You still have the choice of buying a full priced handset elsewhere and using it with telecom skinny, just as you do with VF and 2d, however neither of them offer the choice of committing to the prepaid service for 9 months and getting a discount on the handset. I have no problem with people getting added choices on how they pay for their handsets.

Richard rich.ms

P1n3apqlExpr3ss

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#556023 9-Dec-2011 17:53

Oh okay, thanks guys. Seems as if 2d is overreacting a bit in that case then? Will be interesting to see what the CC thinks

PaulBrislen

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#556033 9-Dec-2011 18:54

The problem with handset locking (or SIM locking or however they're doing it) is that it's a barrier to switching companies, and we've already got enough of those.

Internationally, locking has been used to stop people buying a phone cheaply on one plan (well, not cheaply, but with less cash up front - you pay the full whack) and then simply moving to another provider.

In New Zealand the companies have offered zero dollars up front offers (and the like) if you agree to a term contract. This is far more efficient because there's a break fee which is designed to recoup the cost of the handset, you know exactly what you're getting into and you have to give the telco some certainty around your actions for the months ahead.

Handset locking is a problem because it generates a black market in unlocking (probably already there but certainly not mainstream) and it encourages companies to try to lock you to a network. I'll stay with a provider that offers me better value or a better experience but I don't like the idea of being locked to a provider because I have to remain.

It might well be good for the telco but it's not good for the customer.

Either way it's a moot point. Handset locking is such an emotional topic that any company that does introduce it gets into trouble with the people who matter the most - the customers.

Don't forget, this isn't the last word on the matter. If Telecom gets to introduce handset locking via Skinny, then Vodafone will and eventually the entire market will offer locked handsets. That's going to be awful.

I note that Telecom is distancing itself from Skinny as much as possible. Different team, different brand, different office... all that's well and good but it's 100% owned by Telecom, uses the Telecom network and is staffed by Telecom staff. It's a Telecom brand and if/when this goes wrong it will come back on the Telecom brand.

I'd hope that Telecom corporate can put some pressure on Skinny to drop this idea before launch. I'd welcome that and I'd welcome the Commerce Commission not having to wade in to yet another attempt by the telco industry to limit customers' ability to move providers. It's time we grew out of that.

Cheers

Paul

codyc1515

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#556035 9-Dec-2011 19:07

PaulBrislen: The problem with handset locking (or SIM locking or however they're doing it) is that it's a barrier to switching companies, and we've already got enough of those.

Internationally, locking has been used to stop people buying a phone cheaply on one plan (well, not cheaply, but with less cash up front - you pay the full whack) and then simply moving to another provider.

In New Zealand the companies have offered zero dollars up front offers (and the like) if you agree to a term contract. This is far more efficient because there's a break fee which is designed to recoup the cost of the handset, you know exactly what you're getting into and you have to give the telco some certainty around your actions for the months ahead.

Handset locking is a problem because it generates a black market in unlocking (probably already there but certainly not mainstream) and it encourages companies to try to lock you to a network. I'll stay with a provider that offers me better value or a better experience but I don't like the idea of being locked to a provider because I have to remain.

It might well be good for the telco but it's not good for the customer.

Either way it's a moot point. Handset locking is such an emotional topic that any company that does introduce it gets into trouble with the people who matter the most - the customers.

Don't forget, this isn't the last word on the matter. If Telecom gets to introduce handset locking via Skinny, then Vodafone will and eventually the entire market will offer locked handsets. That's going to be awful.

I note that Telecom is distancing itself from Skinny as much as possible. Different team, different brand, different office... all that's well and good but it's 100% owned by Telecom, uses the Telecom network and is staffed by Telecom staff. It's a Telecom brand and if/when this goes wrong it will come back on the Telecom brand.

I'd hope that Telecom corporate can put some pressure on Skinny to drop this idea before launch. I'd welcome that and I'd welcome the Commerce Commission not having to wade in to yet another attempt by the telco industry to limit customers' ability to move providers. It's time we grew out of that.

Cheers

Paul

Couldn't agree more, excellent post :)

networkn

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#556036 9-Dec-2011 19:12

freitasm:
networkn: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10772125

Man telecom make 2 steps forward and 2 steps backward, this kinda stuff is just lame.

Seems that the core of Telecom has the bad old attitude from days of old. Pity really, they are making grounds in so many ways that are encouraging.

Why? If you want Premium they offer XT if you want cheap they offer Skinny. You have a choice. And if you do not like the options there are other providers.

The article covers at most of it's length the locking of the phone to the network. This is the issue I was referring to.

ahmad

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#556037 9-Dec-2011 19:13

Hi Paul I have huge respect for your opinions but how does this differ from the term contract locking with ETC?

If Skinny says upfront that a phone has a 9 month contract and buyout for $30 (save for example $50 on the phone), isn't that pretty much the same as a $50 subsidy with a $30 ETC?

I know what you are implying is that this could be the thin end of the wedge (let's face it $30 isn't a hell of a lot of money). But I still can't understand how this differs fundamentally to postpaid subsidies on term contract?

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codyc1515

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#556038 9-Dec-2011 19:14

ahmad: Hi Paul I have huge respect for your opinions but how does this differ from the term contract locking with ETC?

If Skinny says upfront that a phone has a 9 month contract and buyout for $30 (save for example $50 on the phone), isn't that pretty much the same as a $50 subsidy with a $30 ETC?

I know what you are implying is that this could be the thin end of the wedge (let's face it $30 isn't a hell of a lot of money). But I still can't understand how this differs fundamentally to postpaid subsidies on term contract?

Because with a contract you know what you are getting into vs. just buying a phone.

Cymro

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#556040 9-Dec-2011 19:21

PaulBrislen:

In New Zealand the companies have offered zero dollars up front offers (and the like) if you agree to a term contract. This is far more efficient because there's a break fee which is designed to recoup the cost of the handset, you know exactly what you're getting into and you have to give the telco some certainty around your actions for the months ahead.

Handset locking is a problem because it generates a black market in unlocking (probably already there but certainly not mainstream) and it encourages companies to try to lock you to a network. I'll stay with a provider that offers me better value or a better experience but I don't like the idea of being locked to a provider because I have to remain.

I'm sorry, but how is a contract break fee any different to an unlock fee?

Why do you "have to remain"?
They are offering you a service to unlock the handset if you want to pay them back the handset subsidy.

It's basically pseudo contracting for pre-pay, without a set amount you have to pay each month.

Oh the horror.

ahmad

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#556041 9-Dec-2011 19:22

codyc1515:
ahmad: Hi Paul I have huge respect for your opinions but how does this differ from the term contract locking with ETC?

If Skinny says upfront that a phone has a 9 month contract and buyout for $30 (save for example $50 on the phone), isn't that pretty much the same as a $50 subsidy with a $30 ETC?

I know what you are implying is that this could be the thin end of the wedge (let's face it $30 isn't a hell of a lot of money). But I still can't understand how this differs fundamentally to postpaid subsidies on term contract?

Because with a contract you know what you are getting into vs. just buying a phone.

How so? If declared I see absolutely no difference.

freitasm

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#556044 9-Dec-2011 19:30

codyc1515:
ahmad: Hi Paul I have huge respect for your opinions but how does this differ from the term contract locking with ETC?

If Skinny says upfront that a phone has a 9 month contract and buyout for $30 (save for example $50 on the phone), isn't that pretty much the same as a $50 subsidy with a $30 ETC?

I know what you are implying is that this could be the thin end of the wedge (let's face it $30 isn't a hell of a lot of money). But I still can't understand how this differs fundamentally to postpaid subsidies on term contract?

Because with a contract you know what you are getting into vs. just buying a phone.

People buying from Skinny will know it. It's on their FAQ, it will be on the boxes.

The kind of people who buy a $1,200 iPhone from Vodafone then complain they didn't know they had to pay to switch to Telecom will not disappear... These will exist and will never pay attention to anything.

There's so much one can do against stupidity.

richms

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#556073 9-Dec-2011 20:31

I know in the UK where everyone is on contract except for chav's and illegals, that people jumping contracts for the free phone is a big deal even with locking.

I would have no problem with a return to all providers handset lockign so long as there was a _decent_ subsidy and the buy out costs disclosed upfront. Oh, and that they can remember how to unlock them unlike the first lot of @vodafonenz handsets that were locked and then many years later they have no idea how to unlock them.

Richard rich.ms

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#556107 9-Dec-2011 21:29

PaulBrislen: The problem with handset locking (or SIM locking or however they're doing it) is that it's a barrier to switching companies, and we've already got enough of those.

in telecoms case, the barriers are probably even higher due to the number of vodafone and 2deg only compatible phones out there that are restricted to the 900/2100 3g bands (most likely by special request of vodafone here or globally).

sim locking phones is, in my opinion, a much friendlier option than building hardware that physically wont work across several networks. at least you can unlock a sim locked device... you can add frequencies to a radio thats had them stripped out...

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sbiddle

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#556112 9-Dec-2011 21:39

The scary thing is the Commerce Commission investigating it. Remember their job isn't to be fair or impartial.

Just remember these are the people who set your broadband pricing in NZ due to regulated wholesale pricing that has fundamental flaws in the methodology, and who made credit card surcharges legal, while every other competition regulator in the world is trying to get rid of them.

codyc1515

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#556113 9-Dec-2011 21:40

sbiddle: The scary thing is the Commerce Commission investigating it. Remember their job isn't to be fair or impartial.

Just remember these are the people who set your broadband pricing in NZ due to regulated wholesale pricing that has fundamental flaws in the methodology, and who made credit card surcharges legal, while every other competition regulator in the world is trying to get rid of them.

Would you say that if the outcome is that it is anti-competitive that they are working in NZs best interests?

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