Vodafone is expensive

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#198378 27-Feb-2009 13:23

PaulBrislen: It's the Commerce Commission that says NZ's charging is so high - the OECD rankings put NZ in the top half of the OECD when it comes to value. That's based on Vodafone's Base plans - and the Commerce Commission doesn't include them when calculating local prices.

It's something of a bone of contention for us - we have plans that are world class yet ignored by the Commission when it decides how well NZ is doing. I for one don't think that's fair.

I'm not trying to knock you Paul but when the company decides to create a plan that was hidden on the website, had no promotion, had significant restrictions including no roaming, a compulsary 3yr contract, no handset discounts, excluded all VF promos, was not even included in retail staff training (many of whom never even knew the plan existed) all with the sole purpose of trying to fudge their way into the OECD stats can you really blame the Commerce Commission for excluding it from their comparisions? It was a plan that was unsuitable for 99% of your users and the fact that you only had a handful of people ever sign up to this before the restrictions was lifted was IMHO justification for them excluding this plan from comparisons. The Commerce Commission saw what you were trying to do and pwn3d you.

All's fair in love and war!

Now that these stupid restictions have been lifted and the Base plans are now in effect merged with the You Choose offering IMHO the Commerce Commission should potentially be looking at these offerings.

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#198394 27-Feb-2009 14:22

No argument from me... none at all.

but those restrictions have all been removed and still the CC doesn't want to include them. That's not playiing fair - we should be comparing apples with apples not apples with something the CC decides could be an apple.

Personal bugbear... will stop now.

Cheers

Paul

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http://forum.vodafone.co.nz

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#198404 27-Feb-2009 15:33

PaulBrislen: No argument from me... none at all.

but those restrictions have all been removed and still the CC doesn't want to include them. That's not playiing fair - we should be comparing apples with apples not apples with something the CC decides could be an apple.

Personal bugbear... will stop now.

Cheers

Paul

Paul I believe you have read this submission.

http://www.comcom.govt.nz//IndustryRegulation/Telecommunications/Investigations/ContentFiles/Documents/NZC%20Submission.pdf

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#198407 27-Feb-2009 15:51

I have indeed.

What NZ C fails to mention is that if we're comparing apples with apples (my favourite theme this week) the best way to do that is to get a bunch of regulators in a room and get them to take a bunch of MTR regimes from around the world, figure out how to put them all on the same level playing field and compare your country with that.

Fortunately, the European Regulators Group exists to do just that and it's done just that quite recently (July last year). It takes the price of a three minute call and averages it out so as to take into account countries offering minute plus second pricing versus countries offering second plus second pricing and those offering other things (half minute plus second, peak versus off peak rates and flagfall for example). It then works out a per minute price for calls on those networks.

It's complex but necessary because no two countries use the same system.

Have a look at this page and the chart on page three. Vodafone NZ currently charges 16c/minute, dropping to 15c/minute on April 1. That puts us at 0.06 Euros, or roughly on a par with Austria.

More on the ERG can be found at its website. Its mission statement says:

The European Regulators Group for electronic communications networks and services has been set up by the Commission to provide a suitable mechanism for encouraging cooperation and coordination between national regulatory authorities and the Commission, in order to promote the development of the internal market for electronic communications networks and services, and to seek to achieve consistent application, in all Member States, of the provisions set out in the Directives of the new regulatory framework.

The ACCC in Australia (equivalent to the Commerce Commission) is now using ERG benchmarking as it's the most comprehensive around.

Cheers

Paul

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http://forum.vodafone.co.nz

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#198410 27-Feb-2009 15:59

PaulBrislen: I have indeed.

What NZ C fails to mention is that if we're comparing apples with apples (my favourite theme this week) the best way to do that is to get a bunch of regulators in a room and get them to take a bunch of MTR regimes from around the world, figure out how to put them all on the same level playing field and compare your country with that.

Fortunately, the European Regulators Group exists to do just that and it's done just that quite recently (July last year). It takes the price of a three minute call and averages it out so as to take into account countries offering minute plus second pricing versus countries offering second plus second pricing and those offering other things (half minute plus second, peak versus off peak rates and flagfall for example). It then works out a per minute price for calls on those networks.

It's complex but necessary because no two countries use the same system.

Have a look at this page and the chart on page three. Vodafone NZ currently charges 16c/minute, dropping to 15c/minute on April 1. That puts us at 0.06 Euros, or roughly on a par with Austria.

More on the ERG can be found at its website. Its mission statement says:

The European Regulators Group for electronic communications networks and services has been set up by the Commission to provide a suitable mechanism for encouraging cooperation and coordination between national regulatory authorities and the Commission, in order to promote the development of the internal market for electronic communications networks and services, and to seek to achieve consistent application, in all Member States, of the provisions set out in the Directives of the new regulatory framework.

The ACCC in Australia (equivalent to the Commerce Commission) is now using ERG benchmarking as it's the most comprehensive around.

Cheers

Paul

But hasn't the European Union just two weeks ago ordered all mobile teleco's to cut M2M rates by 70% over two years. Surely this changes the methodology.

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#198411 27-Feb-2009 16:07

I don't know why it changes the methodology... just the raw numbers. Also, retail prices do not directly correlate with MTRs - there's no match up within that ERG list at all.

Also, it's a draft ruling, not final, and doesn't have any impact on today's rates. Isn't that what we're talking about? Whether Vodafone is too expensive today? Currently we're in the top half of the OECD.

Cheers

Paul

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http://forum.vodafone.co.nz

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#198412 27-Feb-2009 16:12

PaulBrislen: I don't know why it changes the methodology... just the raw numbers. Also, retail prices do not directly correlate with MTRs - there's no match up within that ERG list at all.

Also, it's a draft ruling, not final, and doesn't have any impact on today's rates. Isn't that what we're talking about? Whether Vodafone is too expensive today? Currently we're in the top half of the OECD.

Cheers

Paul

That will be decided by the Commerce Commission and the Minister when the investigation into high MTR's concludes later in the year.

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#198415 27-Feb-2009 16:16

While we're on the subject, are you all aware of the issue of pass through with regard to mobile termination rates and why the Govt accepted the Deed of Undertaking from Telecom and Vodafone...?

Happy to talk about it if it's of interest. Might need a new thread though.

Cheers

Paul

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Vodafone

http://forum.vodafone.co.nz

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#198418 27-Feb-2009 16:22

PaulBrislen: While we're on the subject, are you all aware of the issue of pass through with regard to mobile termination rates and why the Govt accepted the Deed of Undertaking from Telecom and Vodafone...?

Happy to talk about it if it's of interest. Might need a new thread though.

Cheers

Paul

I know all about the issue. Some Politicians haven't a clue when it comes to Telecommunications. One only has to look at how much they paid to buy back the rail. It was $300million over what the business was worth. Your not inferring that politicans are clever are you. Especially the last lot.

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#198419 27-Feb-2009 16:30

PaulBrislen: I have indeed.

What NZ C fails to mention is that if we're comparing apples with apples (my favourite theme this week) the best way to do that is to get a bunch of regulators in a room and get them to take a bunch of MTR regimes from around the world, figure out how to put them all on the same level playing field and compare your country with that.

Fortunately, the European Regulators Group exists to do just that and it's done just that quite recently (July last year). It takes the price of a three minute call and averages it out so as to take into account countries offering minute plus second pricing versus countries offering second plus second pricing and those offering other things (half minute plus second, peak versus off peak rates and flagfall for example). It then works out a per minute price for calls on those networks.

It's complex but necessary because no two countries use the same system.

Have a look at this page and the chart on page three. Vodafone NZ currently charges 16c/minute, dropping to 15c/minute on April 1. That puts us at 0.06 Euros, or roughly on a par with Austria.

More on the ERG can be found at its website. Its mission statement says:

The European Regulators Group for electronic communications networks and services has been set up by the Commission to provide a suitable mechanism for encouraging cooperation and coordination between national regulatory authorities and the Commission, in order to promote the development of the internal market for electronic communications networks and services, and to seek to achieve consistent application, in all Member States, of the provisions set out in the Directives of the new regulatory framework.

The ACCC in Australia (equivalent to the Commerce Commission) is now using ERG benchmarking as it's the most comprehensive around.

Cheers

Paul

By starting the argument that Vodafone NZ's MTR's are actually very low you start opening yourself up to planty of counter arguments over pricing.

Benchmarking NZ MTR's against foreign MTR's using a direct currency coversion is just plain daft. We all know that the buying power of the Euro and $NZ is far from equal so there are significant flaws in doing that.

You're also now showing how over priced calling is in NZ based upon the MTR's.

Start comparing MTR rates and calling rates you'll find that in many European countries that average prepaid calling rates are around 3-4 x the MTR calling rates. A figure of 4 is on the high end, most are well below this. Here in NZ our prepay calling rate is 89c per minute which is above the 4x rate (is that 16c now incl or excl Paul?) Lets not forget that local calls are bill and keep here in NZ and I'm sure Vodafone try and interconnect as many mobile -> PSTN calls as they can within the LICA which means many mobile -> landline calls cost them $0 per minute to terminate.

Look at On Account plans and you realise how close calling rates are to the MTR's.

In the UK a base 15 pound per month plan on Vodafone gives you 200 mins and unlimited SMS. That works out at 8.4 euro cents per min when the MTR is 7.7 cents per minute. Here in NZ calling rates don't get anywhere near that - something that becomes even more surprising when you factor in that the % breakdown of calls in the UK to other mobiles (vs calls to landlines) is very high compared to other countries as many people no longer have landline phones due to their high rate of mobile adoption.

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#198422 27-Feb-2009 16:45

Hi Steve, the CC uses a ten-year average for its currency conversations... with that in mind, we've compared our rates to ERG listed rates and we're still in the lower half in terms of MTRs. I can try posting the two charts (today's exchange rate versus 10-year average) if you like - my skillz are not in the graphical area. Happy to have a go though if it's of interest.

I'm afraid you've lost me when you're talking about us routing calls through the PSTN. All mobile calls go on the mobile network - fixed calls go on the fixed network as it's easier that way. Our fixed to mobile and mobile to mobile rates are the same - 16c/minute today (GST exclusive I believe) going to 15c/min on April 1, then 14.4c/min April 2010 and 14c/min in April 2011.

I think you're mixing up MTRs with retail pricing as well. MTRs really don't have anything to do with the retail price (I have a chart to show MTRs across Europe and their equivalent retail prices - there's no correlation. You'd expect high MTRs to equate to high retail but that's not the case at all). Our argument is that if you're going to introduce regulation that simply passes money from one telco to another you're doing nobody any favours.

The Deed of Undertaking that Vodafone and Telecom both agreed on with Govt does pass on the savings. All the savings. We're legally bound to pass on 100% of the savings to the customers. In the 21 months since the Deed came into effect (it's supposed to go for five years) we've reduced our prices and customers have saved $21 million in fixed to mobile calls. Over the five years we estimate the savings at $90m (depends on how many calls are made). The ComCom regulation would only have generated savings of $45 to $60m (I'll find the link for you if you like).

In Australia, the ACCC recently pointed out that it had reduced MTRs in Aus by 12c/minute (a huge fall from 21c to 9c) but that Telstra had passed on only one quarter of the savings to customers... in fact, the price of calls from fixed to mobile in Australia has INCREASED in that time period. Telstra has pocketed the rest of the savings to the tune of tens of millions of dollars. The ACCC is now saying perhaps it should look to the model we have in NZ as the way forward.

Let me know if you want the charts and I'll try to post them.

cheers

Paul

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Vodafone

http://forum.vodafone.co.nz

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#198425 27-Feb-2009 16:53

When I talked about the PSTN rates I was meaning that Vodafone Mobile -> PSTN calls are presumably all essentially zero rated since they are exchanged where possible within the same LICA and bill & keep applies. This means your revenue from mobile -> landline calls is fantastic unlike many other countries where bill and keep does not apply and mobile carriers are paying termination rates to interconnect with the PSTN.

I don't disagree for one minute that here in NZ landline -> mobile calls have dropped. Maybe not for all carriers but overall there has been a significant reduction and many people should now only be paying around 30c or just over for calls.

I would be interested to see some current data showing European MTR's and average call cost and customer APRU if you have anything like that publically available.

What does skew figures here though is the per minute rounding..

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#203362 25-Mar-2009 23:06

Another one today on the herald -

http://www.nzherald.co.nz/technology/news/article.cfm?c_id=5&objectid=10563475

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#203364 25-Mar-2009 23:24

I'm all up for the "bill and keep" termination method where, and i quote "each network agrees to terminate calls from other networks at no charge, with each network keeping the revenue from their own customers' calls and SMS messages."

I'm assuming this is what the networks in Aussie and the US do?

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#203384 26-Mar-2009 06:44

simon14: I'm all up for the "bill and keep" termination method where, and i quote "each network agrees to terminate calls from other networks at no charge, with each network keeping the revenue from their own customers' calls and SMS messages."

I'm assuming this is what the networks in Aussie and the US do?

No it's not usd in Australia for mobile calls and infact I don't believe there are many (if any yet) Western countries that have CPP are using it to replace MTR's, but there certainly is plenty of discussion in the EU over it. I'm sure Paul will know who's using it and be able to tell you.

In the USA I believe quite a few telco's have bill & keep for mobile but you have to remember that it's a completely differnet ball game since they don't have CPP for their mobile calls and mobile users pay (either directly or indirectly) for answering incoming calls.

It's a very complex issue that has the potential to hurt incumbent telcos while offering huge gains to new players. NZ Comms would love it since initially probably 90%+ of calls would to be Telecom or Vodafone and they wouldn't have to pay either company a single cent.

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