Is On-Net special pricing eg. BestMates/Favourites/TXT2000 good for competition or anti-competitve?

Forums › One New Zealand (including Vodafone, WxC, Farmside) › Is On-Net special pricing eg. BestMates/Favourites/TXT2000 good for competition or anti-competitve?

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simon14

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#308797 18-Mar-2010 15:28

sbiddle:
simon14:
Is this anti competitive though? Of course it is...

In exactly what way?

How is Best Mate or Family either reducing or preventing competition in the marketplace?

Because it ties small groups of people together, so that if one person leaves, the cost of that person communicating to their direct friends will go up as well as the cost of their friends communication with them.

Why does this prevent competition? Well if a large player has made calling rates between all their customers much cheaper than calling off net, then why would people leave the large player and pay much more to join a smaller newer player?

ahmad

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#308835 18-Mar-2010 16:35

Has on-net pricing ever been the subject of scrutiny by either our local regulatory bodies, or watchdogs in the EU (where they seem to be pretty active when it comes to any behaviour seen as anti-competitive?)

Hammerer

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#308877 18-Mar-2010 19:12

simon14:
sbiddle:
simon14:
Is this anti competitive though? Of course it is...

In exactly what way?

How is Best Mate or Family either reducing or preventing competition in the marketplace?

Because it ties small groups of people together, so that if one person leaves, the cost of that person communicating to their direct friends will go up as well as the cost of their friends communication with them.

Why does this prevent competition? Well if a large player has made calling rates between all their customers much cheaper than calling off net, then why would people leave the large player and pay much more to join a smaller newer player?

Any competitive advantage is not automatically anti-competition. Organisations and invidividuals, both commercial and not-for-profit, work hard to ensure that there is a signficant cost to moving to a competing service or product. They work with our emotions, finances, social status, etc.

Much as I've benefited from Vodafone's plans, particularly the Family plan (4 people), this situation is eating up my goodwill because I'm in a large family (8 people) that looks like feuding Verona with the Montagues and Capulets having little to do with each other apart from Romeo and Juliet (with phones for both networks).

sbiddle

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#308886 18-Mar-2010 19:51

simon14:
sbiddle:
simon14:
Is this anti competitive though? Of course it is...

In exactly what way?

How is Best Mate or Family either reducing or preventing competition in the marketplace?

Because it ties small groups of people together, so that if one person leaves, the cost of that person communicating to their direct friends will go up as well as the cost of their friends communication with them.

Why does this prevent competition? Well if a large player has made calling rates between all their customers much cheaper than calling off net, then why would people leave the large player and pay much more to join a smaller newer player?

You're totally ignoring the fact cheap on-net bundles were pioneered by new extrants into existing markets, typically the 3rd operator who wanted a way of launching a product into the market that got people hooked and also convinced them to move friends to the same network.

It doesn't prevent competition in any way, there are basic tests and this wouldn't pass any. The simple fact such plans exist is proof that competition is alive and well within the marketplace - an operator wouldn't offer cheaper calling if they didn't believe that it was an effective marketing tool.

scheduler

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#308914 18-Mar-2010 20:57

Quite right S Biddle. Competition means Each Operator will set there marketing to exploit a niche they perceive. IF I was using Best Mates I would pay a inflated per minute cost to subsidise the cost of providing Best Mates. As I have no need to use Best Mates I have given my mobile business to a operator that has a per minute rate that is between half and quarter of the competition. Having said that I am also using other products available that have Best Mates also saving a considerable saving on my previous People.
I do not believe every operator should attempt to be all things to all people but rather seek to idebtify their Target market and serve it well

MikeyPI

450 posts

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#309006 19-Mar-2010 08:56

simon14:
friedCrumpet: On-net deals are fine when you are not in a monopoly or dominate player position. When you are such a big player in the market then deals such as these are anti-competitive because they erect a barrier to entry for the competition.

Whether or not you consider Vodafone's market share to be big enough to be considered a monopoly or dominant is another question altogether.

That's exactly right, no one in our Family addon can join 2degrees directly because of the cheap on-net calling offered by Vodafone.

Yes they can, they just dont want to cos its cheaper.

MikeyPI

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#309009 19-Mar-2010 09:00

ahmad: Has on-net pricing ever been the subject of scrutiny by either our local regulatory bodies, or watchdogs in the EU (where they seem to be pretty active when it comes to any behaviour seen as anti-competitive?)

No because it doesn't come close to being anti-competitive. Just because you want things a different way, doesn't make it illegal or anti-competitive.

So what you saying is all rewards programs Flybuys etc is anti-competitive? Prompt payment discount with your power company anti-competitive? 20c off fuel at BP anti-competitive?

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coffeebaron

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#309013 19-Mar-2010 09:12

Also to be noted, 2dgrees have their version of on net pricing. With the magic topup, you get cheaper on-net calls, and to landlines.

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ahmad

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#309045 19-Mar-2010 10:57

MikeyPI:
ahmad: Has on-net pricing ever been the subject of scrutiny by either our local regulatory bodies, or watchdogs in the EU (where they seem to be pretty active when it comes to any behaviour seen as anti-competitive?)

No because it doesn't come close to being anti-competitive. Just because you want things a different way, doesn't make it illegal or anti-competitive.

So what you saying is all rewards programs Flybuys etc is anti-competitive? Prompt payment discount with your power company anti-competitive? 20c off fuel at BP anti-competitive?

Cheers for putting a slant on my post that wasn't there - GG.

From the outset I called for a reasoned and mature discussion about the subject, and made it clear that I wasn't accusing any network of anti-competitive behaviour. Awesome. I never even expressed a desire for things to be any different as you try to imply.

coffeebaron: Also to be noted, 2dgrees have their version of on net pricing. With the magic topup, you get cheaper on-net calls, and to landlines.

The interesting thing I note about 2degrees on-net pricing is that it is not explicitly advertised. They simply say that you get a little bit of "magic" when you top up.

Of course you/I/geeks know how it works, but they don't come out in most of their marketing to advertise the details of the deal.

I wonder if it because some people said pre-launch that it would be hypocritical for 2degrees to have on-net price differentiation when they had criticised it in the "Da Vinci code" part of their pre-launch advertising. Another reason might be that they want the flexibility of changing/withdrawing the "magic" offers in due course.

In a way I find it almost more "upfront" for them not to mention the 22c calling rate in the "headline rate card". Another company might say "from 22c/min calling" and then cover themselves with fine print.

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