Telecom to raise rental

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charris1955

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Topic # 6273 12-Jan-2006 09:01

Telecom to raise rental

New Zealand Telecom says it is increasing line rental charges by 5.9% from March, although customers using discount packages such as Anytime, Budget Link and 60s Plus will have their charges frozen. Telecom’s head of consumer marketing, Victoria Crone, commented: “We’re encouraging customers to choose the plan that can deliver the most savings for them, depending on their calling patterns.” She added that the increase, which will see the standard monthly charge rise from NZD39.85 to NZD42.20, is the first hike for two years.

freitasm

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Reply # 26220 12-Jan-2006 09:10

A lot of discussion in another thread, which I asked to be moved here. Someone commented on the fact that the official press release had the following text:

"The overall cost of telecommunications is continuing to come down. National toll call prices are now 15% lower than they were three years ago, and international calling is 30% cheaper”.

It seems like something not matching - if the prices of calls are coming down, how come rent is going up?

On second thought, we have to separate the service "call" and "rent". One is for the calling itself, the other is the infrastructure and its maintenance. These are separate things in the bill, aren't they?

Now, I am not defending the price hike (which I think will impact those who only have the phone to call mum and dad next door), just pointing that these are different things and people should examine these under different conditions.

Your take?

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DjShadow

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Reply # 26229 12-Jan-2006 10:08

I guess they don't consider VoIP lines a big threat yet since woosh and wired country have real limited coverage. And you need a phoneline to get DSL so I hate to say Telecom has it easy :(

Pernod

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Reply # 26259 12-Jan-2006 13:20

On second thought, we have to separate the service "call" and "rent". One is for the calling itself, the other is the infrastructure and its maintenance. These are separate things in the bill, aren't they?

I dissagree, as an end consumer I dont care how much is matainace, how much is variable cost, how much is depreciation etc etc. All I care about is the end cost, and how much value I get for it.

They have clearly stated that calling revenues are dropping, along with the rate, so they appear to be simply raising their monthly charge to shift how they get revenue from customers. I would be ropeable if I heard from my bank that my monthly charge is going up because I wasn't giving them enough in transaction charges - and I dont see this as any different.

I'm probably not their ideal customer though, as last time Telecom raised their rental I ditched the landline altogether. After all, an extra $40 on my mobile bill buys more minutes that I was using on the landline, and I can call from anywhere. I find the mobile/woosh option is a mile more flexible than a fixed line :-)

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Reply # 26260 12-Jan-2006 13:31

Pernod: I'm probably not their ideal customer though, as last time Telecom raised their rental I ditched the landline altogether. After all, an extra $40 on my mobile bill buys more minutes that I was using on the landline, and I can call from anywhere. I find the mobile/woosh option is a mile more flexible than a fixed line :-)

My current arrangement is exactly the same. My $20 fee for Vodafone Get70 covers all of my personal calling. If I need to use a phone during business hours, there's one on my desk at work.

Grantis

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Reply # 26389 13-Jan-2006 20:25

Considering Telecom made $916,000,000 Net Profit last year, I don't think they are hard up for cash at all!

IMHO the main reason for Telecom increasing their line rental is to cover the imminent implementation of TelstraClear's UBS arrangement, nothing else.

Not forgetting of course, Telecom is approximately 75% owned by foreign investors, so the line rental increase could also be used to increase their dividend. :-(

riahon

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Reply # 26393 13-Jan-2006 20:48

Or they can switch to TC and pay $44.95......... hang on thats dearer. Oh thats right, they put their prices up by $5 in less than a year because, some customers were not "worthy" of their service. Now thats a great alternative.

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Grantis

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Reply # 26395 13-Jan-2006 21:34

riahon: Or they can switch to TC and pay $44.95......... hang on thats dearer. Oh thats right, they put their prices up by $5 in less than a year because, some customers were not "worthy" of their service. Now thats a great alternative.

TelstraClear receive a miniscule amount of money from reselling Telecoms products & you should know that. By increasing their line rental, they would stand to make a fraction more. I understand that before the increase TelstraClear made 16% per customer, although I'm not entirely certain. The rest goes into Telecoms coffers.

Also, your forgetting another very big issue, how many customers does Telecom have from whom they will reap the rewards of this price increase, compared to TelstraClears max of approximately 40,000 wholesale customers? The benefits are grossly in favour of Telecom by "at least" well over a million customers more.

Finally, I thought that TelstraClear were no longer offering the HomePlan to new customers, because it wasn't financially worth it to them, understandably, due to the poor profit margins.

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Reply # 26403 13-Jan-2006 22:47

Our home line gets cut off end off at the end of this bill cycle

sbiddle

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Reply # 26413 14-Jan-2006 06:38

Grantis:
TelstraClear receive a miniscule amount of money from reselling Telecoms products & you should know that. By increasing their line rental, they would stand to make a fraction more. I understand that before the increase TelstraClear made 16% per customer, although I'm not entirely certain. The rest goes into Telecoms coffers.

It was a 2.5% discount of Telecom's strandard rate.

TCL believed that they could make money by getting large numbers of customers but unfortunately this never happened - the support (ie running a call center for customers) and costs of sending out a bill meant they were losing money on a large number of the customers that did switch.

sbiddle

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Reply # 26414 14-Jan-2006 07:49

It's actually a 2% discount off the standard line rental and 16% reduction off the 60+ plan.

Grantis

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Reply # 26429 14-Jan-2006 17:42

sbiddle: It's actually a 2% discount off the standard line rental and 16% reduction off the 60+ plan.

Yeah that's right. I tried to find to find the figures last night as I didn't want to take a guess, but I couldn't find them, so thanks for that.

The whole idea was flawed from the start, due to the pathetic margins which were enforced by the Commerce Commissioner & Telecom.

At the end of the day I suppose, TelstraClear had to at least try it, prove that it doesn't work, then fight for ULL again. Just another part of the extremely slow process I guess that customers & any competition to Telecom have to endure, which is rather sad I think.

Regulation of Telecom simply doesn't work & the only way forward is to ULL, end of story.

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Reply # 26441 14-Jan-2006 18:30

Grantis:
Regulation of Telecom simply doesn't work & the only way forward is to ULL, end of story.

I actually don't believe it is the only way forward. The current wholesale access would work fine if Telecom weren't dictating what products they will provide. Unbundling might give you some better broadband options when the large players install DSLAMS but it'll be a case of the large ISP's installing their gear and then reselling it to the smaller players which in an essence is no different to Telecom offering the service as it is now. Telecom could be offering higher speeds now but they simply choose not to for commercial reasons.

Even if unbundling occurs it would be highly unlikely that you would be able to get an ADSL connection without a phone line which means you'll still have to have a Telecom line. TCL have said they would offer phone services in some places.

Grantis

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Reply # 26444 14-Jan-2006 19:12

sbiddle:
I actually don't believe it is the only way forward. The current wholesale access would work fine if Telecom weren't dictating what products they will provide.

But that's exactly the problem, with Telecom having total control over the network, you won't get acceptable wholesale arrangements. Prime example 128kbps uplink anyone? lol
TelstraClear offer or soon will be offering 2Mbit uplink on their cable plans.....

sbiddle:
Even if unbundling occurs it would be highly unlikely that you would be able to get an ADSL connection without a phone line which means you'll still have to have a Telecom line.

TelstraClear already have a national backbone network don't they? Therefore if the ULL was implemented, the only part of the line that Telecom would own, would be from the exchange to your house, so "essentially" it would be over the TelstraClear network.

sbiddle:
TCL have said they would offer phone services in some places.

Do you have a link to that statement?

sbiddle

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Reply # 26455 14-Jan-2006 20:56

Grantis:
sbiddle:
TCL have said they would offer phone services in some places.

Do you have a link to that statement?

No, it was mentioned by Rosemary Howard on several occasions in the past however. From what I gathered reading comments from several TCL execs about 18 months ago they seemed very keen on offering a local service in at least Wgtn & Chch where they already have their switches. In places like Tawa and Porirua they already have fibre in place so providing they had access to the Telecom exchange they could do this very easily.

Grantis

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Reply # 26537 16-Jan-2006 08:55

Telecom stand to make $40,000,000 per year more from this price increase as well.

"Ernie Newman, chief executive of the Telecommunications Users Association of New Zealand (TUANZ) says the increase shows the value of competition. Where there is competition, such as for toll calls, prices have fallen rapidly, Newman says. In contrast residential line rentals, on which Telecom has a monopoly, prices are increasing by around 6% Newman says. "Local line rental is far higher here than in most jurisdictions," he claims.

Newman points out that Telecom offers precisly the same service in Auckland and other parts of the country to customers in Wellington and Christchurch, but because of competition from TelstraClear, it charges $7 to $8 less a month there. This, Newman says, illustrates the value consumers get from competition. He says the price difference adds weight to the argument that Telecom's residential lines business should be opened up to competition in the same way just about every other developed country has done."

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