Interesting quote on mobile termination rates

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VFNZPaulBrislen

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#320706 20-Apr-2010 14:42

Simon, I wish you'd stop interpreting my views. I'm happy enough to answer questions but when you're suggesting things that I'm supposedly suggesting, it gets a tad tricky to follow.

The two-sided argument is quite clear and straightforward. If you took ANY business and regulated one side of its income stream, it will have to do several things. One one side it will have to reduce its expenses. Reduce costs, reduce investment plans, reduce returns to investors.

On the other side of the coin, it will have to increase its income from other sources. Typically, around the world, this means charging the consumer more.

Your supposition is that by reducing MTR it will automatically reduce retail prices. This is simply not true. If anything, the opposite happens. Reduce income from one source and we'll have to find it from another.

Cheers

Paul

Paul Brislen
Head of Corporate Communications
Vodafone

http://forum.vodafone.co.nz

simon14

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#320717 20-Apr-2010 14:58

PaulBrislen: Simon, I wish you'd stop interpreting my views. I'm happy enough to answer questions but when you're suggesting things that I'm supposedly suggesting, it gets a tad tricky to follow.

Apologies, did not mean to offend in anyway :)

PaulBrislen:
The two-sided argument is quite clear and straightforward. If you took ANY business and regulated one side of its income stream, it will have to do several things. One one side it will have to reduce its expenses. Reduce costs, reduce investment plans, reduce returns to investors.

I agree that if a business loses income from one source, it needs to find it somewhere else but maybe VFNZ have been enjoying generous profits for too long and they can afford to take a cut, while maintaining their current levels of spending?

EDIT: I realise i must sound like a hater, but other than all this MTR business, i do quite like Vodafone as a company..... just for the record.

VFNZPaulBrislen

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#320742 20-Apr-2010 16:35

Sorry, was waylaid by a cleansing ale.

No worries. I look at the level of investment in NZ and think there's a caseb to be made for Vodafone having over invested. 3G coverage to 97% was a world first and we're not talking about a small city state/island state like HK or Singapore either. NZ is roughly the same size as the UK but with a fraction of the population.

If you had $3bn to invest in a mobile network would you putbit in a country with 4m people?

So the downside o this kind of regulation is we're not likely to be first in the world, or biggest, or best any longer. We'll take our place in the queue with everyone else.

Paul Brislen
Head of Corporate Communications
Vodafone

http://forum.vodafone.co.nz

ajw

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#320748 20-Apr-2010 16:50

PaulBrislen: Sorry, was waylaid by a cleansing ale.

No worries. I look at the level of investment in NZ and think there's a caseb to be made for Vodafone having over invested. 3G coverage to 97% was a world first and we're not talking about a small city state/island state like HK or Singapore either. NZ is roughly the same size as the UK but with a fraction of the population.

If you had $3bn to invest in a mobile network would you putbit in a country with 4m people?

So the downside o this kind of regulation is we're not likely to be first in the world, or biggest, or best any longer. We'll take our place in the queue with everyone else.

Paul talking about VFNZ being the first in the world, so when are you launching your LTE network. Verizon wireless in the US will be launching LTE later in the year, in Sweden there is now a LTE network.

VFNZPaulBrislen

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#320750 20-Apr-2010 16:52

The govt here has to release the spectrum. Currently it's used for analogue tv so that needs to go first.

Paul Brislen
Head of Corporate Communications
Vodafone

http://forum.vodafone.co.nz

ajw

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#320752 20-Apr-2010 16:56

PaulBrislen: The govt here has to release the spectrum. Currently it's used for analogue tv so that needs to go first.

You have existing 1800MHZ spectrum. I believe this frequency band can be used for LTE technology.

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VFNZPaulBrislen

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#320759 20-Apr-2010 17:07

Not as effectively. LTE proper needs the lower frequencies coming free in 2012/3/4 time frame.

Paul Brislen
Head of Corporate Communications
Vodafone

http://forum.vodafone.co.nz

sbiddle

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#320764 20-Apr-2010 17:14

simon14:
sbiddle:
simon14:
If you are only looking at the price Telecom charge for landline to mobile calls, then sure it looks like the MTR doesn't have much of an impact on the retail price. We all know Telecom are greedy and will milk us for all we are worth but look at other tele companies.... Slingshot offer 25c per minute from italk, wXc offer 35c per minute and so on.

For landline to mobile calls, the MTR is a fixed cost per minute of calling so naturally if this cost is reduced, the retail price will fall....... unless there is not much competition in the market, but i believe we have plenty of competition in the tolls market.

Grans and Grandpas need to realise that Telecom isn't the only telecommunications provider out there and just because they have been with them forever, doesn't mean it's best to stay with them and continue to be ripped off.

You contradict yourself very badly there - first by agreeing that the MTR doesn't affect retail but then by saying the retail cost will drop as the MTR does but statistics from everywhere around the world have shown this is not the case and that 100% passthru doesn't necessarily occur.

No, i am not contradicting myself...

The MTR doesn't affect the retail mobile rate for mobile to mobile calls in NZ - because the traffic between each party is equal and will always be with high MTR's.

As the MTR rate drops, this will create more of an incentive for others to lower their prices because the risk of having an imbalance isn't as much as the MTR goes down.

But you've bad the assumption that voice traffic is balanced when it isn't. Vodafone have a greater chunk of the voice market than Telecom do. From memory the actual numbers were blacked out in the Commerce Commission documents but they are certainly far from equal.

sbiddle

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#320766 20-Apr-2010 17:16

ajw:
PaulBrislen: The govt here has to release the spectrum. Currently it's used for analogue tv so that needs to go first.

You have existing 1800MHZ spectrum. I believe this frequency band can be used for LTE technology.

LTE is being deployed at 2600MHz right now but the 700MHz band is the best option as it'll deliver far better coverage and inbuilding performance, just like the 800/900 + 2100 situation.

Unfortunately this band can't be used in NZ until ASO occurs, and right now that's still likely to be 2014.

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