Vodafones Predatory pricing??

Forums › One New Zealand (including Vodafone, WxC, Farmside) › Vodafones Predatory pricing??

cokemaster

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#16875 1-Nov-2007 17:34

Wonder how far this is going to get:

Stuff: ...Telecommunications company Callplus has complained to the Commerce
Commission, saying Vodafone is selling a fixed-line service at a loss
and cross-subsidising it with monopoly earnings from its GSM cellular
network – the only GSM network in the country.

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freitasm

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#93330 1-Nov-2007 19:58

Vodafone sent out this press release today:

Competitive pricing is a win for customers

The launch of Vodafone’s 12 months' free broadband offer has stirred up the market in the way that no other product has for quite some time, says Vodafone’s general manager of marketing for Ihug, David Joyce.

“Vodafone’s competitors are complaining that the offer is anti-competitive and amounts to predatory pricing. Meanwhile our customers are loving the opportunity to dive into broadband with 33% of all customers signing up in the first month being new to broadband,” says Joyce.

“We are fully focused on giving our customers what they want and we are delivering on the promise of making broadband more accessible to more New Zealanders.”

Vodafone has considered the issues at hand and decided to extend the two offers in the market.

The initial offer, bring your landline to Vodafone and take out our Talk2 tolls package for $20 a month and receive the Broadband1 plan absolutely free, will now run until the end of November. The second offer, bring your landline to Vodafone, buy any of our You Choose 60 or higher mobile plans and receive Broadband1 absolutely free, will now run until the end of January. Both plans require customers to provide their own modem.

“We have increased our fixed-line broadband customer base by almost 30% to date so we’re extending the offer to give more New Zealanders a chance to find out what broadband is really like. Customers who want more than the 1GB of traffic on offer in Broadband1 are able to buy a higher-grade plan and receive a discount of $30/month as well, so even the heavier users can make the most of our offer,” says Joyce.

Bundles are commonplace both within the telecommunications market and in the wider retail environment. Sky TV sells channels bundled together and has done for years. Selling one product below cost is also not uncommon. Orcon has made it quite clear it sells its entry-level broadband at below cost *.

Telecom says it has been subsidising rural customers with earnings from the urban customers and continues to do so as well as selling its entry level broadband plan for less than the wholesale rate it charges competitors**

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#93338 1-Nov-2007 20:37

I personally side with Vodafone on this and really wonder what Callplus are on about. Selling a product below cost is not illegal in New Zealand. Cross subsidies are not illegal in New Zealand and exist in numerous sectors of the marketplace.

If Vodafone are found guily of this then as I see it the current TSO (and Kiwi Share before that) would have to be declared null and void and all monies that have been paid by competing companies to Telecom be refunded and the Government pay Telecom that money. Telecom are forced to sell a phone service below cost by the government in rural areas yet CallPlus see a problem with Vodafone choosing to sell a product that is (potentially) below cost.

paradoxsm

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#93361 1-Nov-2007 22:12

Callplus and Slingshot (Same company) Whinge about everything, I thought I was bad!

I'm sure most profits must be pummeled back into lawyers salaries just to pick holes in every bit of competitors offerings.

Even Woosh while there were problems they have had on an operational level I highly regard as they took the plunge, spent the dough and built their own core network.

Using "value add" as the profit margin while selling or "giving away" other services at or slightly below cost is not a new concept and is very beneficial to the wider public. Kinda like Advertising pays for free Television, and ads pay for our geekzone.

KiwiOverseas66

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#93375 2-Nov-2007 00:20

I'll be interested to see how the commerce commission will react to this one. I'm picking they will move against voda (which is a shame) as the idea of an ultra large corporate using its size to undercut another company just wont sit with the Govt and its current policy direction (regardless of the benefits to the consumer). Also - the govt is so far down the path of supporting small telcos and ISPs - why stop now? Remember the Govts vision of competition is something like the banking,power supply, or petroleum sector - lots of paticipants, mostly all the same size with maybe a couple of really large paticipants, all selling the same thing with a few differences here and there (i.e - the difference between Shell and BP is - that BP has better coffee)!

Its absurd really because the whole point of competition is for companies to fight it out resulting in lower prices for consumers - but one of the potential consequences is that some companies might not survive the competition. That is not, IMHO, something the govt is comfortable with if it reduces the overall number of competitors. Sort of like running the 100 meters sprint but ensuring that everyone finishes in a dead heat.

tonyhughes

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#93376 2-Nov-2007 00:44

Doesnt look predatory to me! I dont make 'tolls' on a landline, and I dont want a You Choose 60 or higher plan. They are appealing to specific segments of the market. and giving free stuff away.

Does CallPlus whinge when a shoe chain does 'buy two pairs, get the third free' because that could be predatory against small mom & pop shoe stores that cant sustain that pricing. Too bad - its competition, and the more we have the better! Though VFNZ does sound a little self righteous in trying to compare free broadband with Telecoms subsidy of rural customers.

CallPlus, stop whining and start innovating!

mobygeek

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#93544 2-Nov-2007 20:43

The bundling is just leverage, isn't it? I mean, Vodafone gets more customers with it's offers, so can afford to give more back? Oops, maybe that's what is predatory - getting more customers. And what about Call-plus? When I was bookkeeping for a company with a six thousand dollar a month telecom bill they had me send the bill in and they promised to save us money. Which they did. It just took a while to send in half a ninety page bill... Working in a competitor's agency (to Vodafone, that is), I see my company pull apart the latest offers to tell me why they aren't as good... So, are these plans good? Is the free twelve months only available on a 24 month contract? Those are the sort of things I am more interested in. Like I always say, get the plan right first and count the freebies as a bonus. I see too many people on the wrong plans, and sitting on them for the full contract.

mike

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#93559 2-Nov-2007 23:44

12 month contract, $199 early disconnection fee.

www.vodafone.co.nz/broadband/

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mobygeek

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#93577 3-Nov-2007 09:18

Thanks Mike. Disconnection fee is a bit steep but I suppose reasonable for getting free broadband in the first place. I'm more interested in costs of calls etc, but I am capable of looking them up myself...