Yay! Real competition to Telecom's landline

Forums › One New Zealand (including Vodafone, WxC, Farmside) › Yay! Real competition to Telecom's landline

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munchkin

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#136826 9-Jun-2008 23:46

billgates:

I am not going to disagree with you and say that more jobs have been outsourced for people overseas and we have been left with nothing. I merely pointed out to the user who said that 8000 jobs are at risk because Vodafone is trying to cut Telecom and force them to close down. This is just not true.

I think you've misunderstood me, I never said that 8000+ jobs were at risk because Vodafone were trying to undercut Telecom with pricing - It was in direct reply to the fact that you yourself stated that you would be a "very happy man" if Telecom closed down.

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billgates

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#136827 9-Jun-2008 23:51

munchkin:
billgates:

I am not going to disagree with you and say that more jobs have been outsourced for people overseas and we have been left with nothing. I merely pointed out to the user who said that 8000 jobs are at risk because Vodafone is trying to cut Telecom and force them to close down. This is just not true.

I think you've misunderstood me, I never said that 8000+ jobs were at risk because Vodafone were trying to undercut Telecom with pricing - It was in direct reply to the fact that you yourself stated that you would be a "very happy man" if Telecom closed down.

Oh, Sorry that was not to be taken seriously.

Do whatever you want to do man.

munchkin

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#136828 9-Jun-2008 23:56

Hmmm.

If that's the case, then why did you say it?

I'm not going to reply to this topic any more unless it goes back to talking about the original topic - I myself have not helped, either, but I feel that continuing in the current manner would do no justice.

idlearts

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#136830 10-Jun-2008 00:19

I don't think a 1 billion profit is exactly what you'd call a fair and equitable margin for a service company more like greedy creamers

thats a lot of cash to be paying the piper. So good on Vodaphone to offer a service that may be of benefit to some people in the community.

This article from 2005 is a of bit reflective info

http://computerworld.co.nz/news.nsf/UNID/BDB34742AD8B321DCC2570540007D75E

According to this article that would make Telecoms profit per connection around $50 a month, think theres a bit of room to move there!

nzdn

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#136831 10-Jun-2008 01:04

billgates:

are you kidding me? Finally there is some tough competition....Lots of old people who live on $200/week would rather go for $25/month free local or $40/month free national + local to talk to their relatives around the country rather than paying Telecom extra $$$ for toll calls....not everyone makes $700/week and Telecom is not going to close down because of this and if they did I for one would be a very happy man....

You've said it all there. I don't think there are many people who give a flying fornication about the impact a price cut has on telco profits or which domicile they ultimately end up in.

So on reflection, with the geek coloured glasses taken off, I say good on ya Vodafone. For people in the lower half of the socio-economic spectrum who just want a home phone, Home Phone Plus has significance akin to the Budget tax cuts!

What follows is my musings on the likely machinations of the telco pricing strategists...(why do I get a visual of Dr Strangelove?)

If this snowballs then you have to presume that Telecom will be forced to counter. I doubt Telecom are in a position to hurry out a competing product with the GSM buildout still ongoing, but in any case they have such a major investment in copper that they can't afford for people to disconnect en masse, so a cut in landline prices may be inevitable.

However Telecom face a dilemma because they will want to drop the price of the landline only (not broadband) to match the Vodafone offering. I don't know what the Commerce Commission would say about a $25/mth landline that is only available without broadband, and adsl providers would be howling for the opportunity to upsell the owners of newly cheap landlines.

In any case the price differential of $25/month vs $70/month (for line + entry level broadband) would risk leaving too much breathing room for alternative broadband providers (possible comeback time for Woosh??) so it seems that landline broadband must drop in price also.

Is there a regulatory loophole that would let Telecom subsidise its own broadband customers without making the same pricing available to other adsl providers - perhaps as a perpetual "promo"? This would be the only way of holding on to some of the lost revenue (by snatching it off the adsl reseller market). I suspect this is not a goer as it makes a sham of operational separation.

In the end all they might have left is FUD - "It's all too newfangled, are you sure it's not going to break down?" "What if the power goes off?" "I hope the signal's strong enough..." "What if you want a monitored alarm one day?"

KiwiOverseas66

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#136836 10-Jun-2008 06:25

idlearts: I don't think a 1 billion profit is exactly what you'd call a fair and equitable margin for a service company more like greedy creamers

hmmmm....lets see, do you think the local dairy you buy your milk from is really selling it to you out of the goodness of his/her good heat, or (shock, horror)! are they making a profit too!

You've never actually read their financial accounts have you? Cost of sale last year - 700 million dollars, tax (just corporate - not including what is paid by wage earners) - 350 million, Debt repayments - 40 million, capital expenditure - 500 million (not including one offs for projects such us the switch to GSM, etc). That's just a few items and it already comes to 1.5 billion in costs. Telecom is a big company. In dollar terms (to you and me) a billion is an unimaginable amount of money - and likewise they have a set of costs to go with it.

Not trying to pick on you idlearts, and more than likely if I met you I would buy you a beer and happily talk about gadgets - but Telecom is a company (a big one at that) and its there to make money, like all the other companies currently in the telco sector. Same as the dairy sector (thought about how much more expensive that 2 litre container of milk is getting), not to mention the oil sector (crikey)! There are no angels, no charities, no non-profit organisations in telecommunications. Asking a company to have a more equitable margin and not make as much money as it can, is like asking a preist to be more logical about religion - its the wrong question.

Sorry mods - very off topic.

cokemaster

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#136848 10-Jun-2008 07:27

billgates:
As for the LLU plan being so expensive still? Well the wholesale prices are set by Telecom so how can we blame Vodafone and Orcon for it? Vodafone and Orcon both plan to introduce VDSL2 through their gear and initially provide the services to busniess. How is that not fast internet? 50Mb Down and 50Mb UP..

Have you actually looked at VDSL2? It requires short copper runs which means that only the people next to exchanges, or people getting coverage under cabinets would benefit from higher speeds. There was a lot of fuss about cabinets from people, remember.

There was a thread by Phil of WorldxChange about the Fiber to the home trials, those will deliver far better coverage and speed. Of course it requires a new median, fiber, but in the scope of things - fiber is the long term goal, if you want fast internet.

Now for the max speeds, Vodafone and Orcon marketing, they may claim 24mbps down on DSL2+ and then compare it against an 'average' dsl subscriber at a speed somewhat lower than DSL1 on telecom (TV3 article on TV) but then fail to take into consideration that you are very unlikely to get 24mbps on Vodafones or Orcons LLU product anyway! Particularly when both are having throughtput issues (based off forum posts)! Maximum speeds are nice but lets be realistic, there are a lot of other factors involved. Don't get stuck in the spin machines.

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freitasm

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#136855 10-Jun-2008 08:13

billgates: are you kidding me? Finally there is some tough competition....Lots of old people who live on $200/week would rather go for $25/month free local or $40/month free national + local to talk to their relatives around the country rather than paying Telecom extra $$$ for toll calls....not everyone makes $700/week and Telecom is not going to close down because of this and if they did I for one would be a very happy man....

I am not talking about the plan. It is great Vodafone came out with something.

I am talking about the OP's comments "Hopefully Telecom's share price will drop a bit because of this." It's the wrong thing to praise in my view.

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sbiddle

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#136856 10-Jun-2008 08:14

It's been very interesting to see some of the comments that have been posted by people in this thread so far.

Personally I think this product is fantastic. Good on Vodafone for launching a product that allows them to gloat that they provide an alternative to Telecom's landline service at a price that substancially undercuts Telecom's offering.

The reality is however that Vodafone can do this because the product is nothering more than a gimmick that at best can only capture a very small chunk of Telecom's business in it's existing form. Why? Because for many people a cellular trunking unit (at least the models being offered by VF at present) are not an option for many households. These days an internet connection is the norm for many households, along with Sky TV and a monitored alarm. People require rewiring of there house to integrate these and not all alarms use ContactID (which is just DTMF tones) so won't work over a GSM voice connection. The lack of internet however is the big issue and one of the reasons why the majority of households would find this product of absolutely no use.

Whenever a company launches a product there are always two factors that need to be considered. Firsly what is the ROI and secondly what impact will this product have on existing products or services. The last thing any company wants is to launch a product that results in churn of existing customers to a product with a lower $ return than what they have currently. Since Vodafone's trunking units are not going to have any impact on existing existing revenue streams and the ROI on such a product is also good then it's a smart business move. The market perceives Vodafone as offering value for money even if nobody is using the product.

IMHO however it shows that while Vodafone are trying to create the public perception of being "the good guys" and Telecom being "evil" and ripping off their customers I just wish Vodafone could focus on their core business which is mobile. If you can offer GSM trunking units as a fixed line alternative with very competitive rates what justification is there for offering us such poor value for money mobile plans in New Zealand? We have per minute rates that are very high by OECD and group standards, total network airtime usage that ranks right near the bottom of the table for the entire group (and really are abysmal when you factor in that all figures back to group are rounded up to the next minute) and plenty of customers who are less than happy with the service provided.

If Vodafone can offer a fixed PSTN replace for $40 per month with unlimited national and local calls why can they not offer us a mobile plan offering unlimited calling to on-network mobiles for $40 per month? Depending on how many POP's Vodafone now have the cost of providing this would be identical or maybe even marginally less (depending on interconnects) than providing the AtHome service. The answer to that is because it would result in a very significant loss of revenue we're never going to see it.

Are Vodafone really the good guys or are they simply trying another Base Plan - fudge the figures so that they can prove to the market and regulators that they do offer very significant value for customers but the reality being that the take up rates of these products are minimal and don't really add to (or more importantly) hurt the bottom line? You decide.

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