Vodafone is expensive

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#203401 26-Mar-2009 08:23

Another one this morning

http://www.nzherald.co.nz/technology/news/article.cfm?c_id=5&objectid=10563582&pnum=0

an excerpt from the same

"In a letter to the mobile telcos - Telecom, Vodafone and potential entrant NZ Communications - Commerce Commission chairwoman Paula Rebstock said the rates the companies propose charging each other for calls from a landline or another mobile network were higher than international benchmarks.

The commission has suggested a rate of 7c a minute for mobile-to-mobile and landline-to-mobile calls, and 1c a text message.

This is much lower than Vodafone and Telecom's plans. Vodafone is proposing to gradually trim its rate for voice calls from 15c a minute to 11c a minute, and ease its rate for text messages from 9.5c to 7c. Telecom is offering to reduce its voice call rate of 16c a minute to 10c a minute and introduce a flat rate of 3.5c a text."

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RockResearch

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#203405 26-Mar-2009 08:28

That is pretty persuasive,

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sep11guy

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#203406 26-Mar-2009 08:30

From the same page

"Vodafone spokesman Paul Brislen said the company was disappointed with the approach taken by the commission, in particular the decision to suggest a 90 per cent cut in the termination rate for text messages.

"Mobile termination rates have got nothing to do with competitors in the market," said Brislen.

Telecom and Vodafone already have an agreement in place signed with the former Minister of Economic Development Trevor Mallard in 2007."

With all respect to Paul,

how cannot you see that termination rate is not a part of the cost? oh yeah, if its not it means that whatever rate you charge is goes fully into your pocket which could be anywere between 60-90% profit alone you make in EACH and every call . is that how it is??

VFNZPaulBrislen

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#203417 26-Mar-2009 09:18

sep11guy: From the same page

"Vodafone spokesman Paul Brislen said the company was disappointed with the approach taken by the commission, in particular the decision to suggest a 90 per cent cut in the termination rate for text messages.

"Mobile termination rates have got nothing to do with competitors in the market," said Brislen.

Telecom and Vodafone already have an agreement in place signed with the former Minister of Economic Development Trevor Mallard in 2007."

With all respect to Paul,

how cannot you see that termination rate is not a part of the cost? oh yeah, if its not it means that whatever rate you charge is goes fully into your pocket which could be anywere between 60-90% profit alone you make in EACH and every call . is that how it is??

I have not said termination rate is not part of the cost... I think you need to re-read that. What I said was that termination rates have nothing to do with the number of competitors in the market.

I'll try to embed a graph here - apologies in advance (my l33t skilz are not what they once were). This is from the European Regulators Group which is a collection of telco regulators who consider these issues. The blue bars are the MTR rate charged by each country. The wiggly black line is the number of operators in each country. You can see there's no correlation betwen competitors and MTRs whatsoever.

OK, I can't embed it. I'll stick it on the forum and link to it.

Now, your question (I think, correct me if I'm wrong) was more about the relationship between MTRs and retail price. Again, the ERG says there is no correlation beyond the very basic floor set by having an MTR in the first place. It compares MTRs with the OECD retail pricing that I referred to early.

I'll put up another graph that shows again the MTRs charged in Europe and Australia and NZ and the retail prices (black wiggly line). From that you'll see that the country with the best OECD retail pricing has MTRs that are higher than NZ and that the countries with the lowest MTRs (including the US which has a kind of Bill and Keep arrangement) have some of the highest retail pricing in the world.

MTRs are a way of allowing telcos to recoup costs from other telcos instead of from the customer. If you (a Telecom customer) call me (a Vodafone customer) you pay your telco xx cents per minute. I am not paying anything to receive that call, yet my telco shares the costs equally with your telco. My telco could either charge me to receive the call (bad idea) or charge the other telco, which is what we do. It works, and works well, because it means we don't have to charge customers to receive a call.

In the US, where this method is common, market penetration is about 70% and stuck there. Why? In part it's because there's an entire segment of the market (the prepay, don't make many calls but receive a lot market segment) that simply can't afford to have a mobile. They pay to receive calls and that acts against the market.

The other alternative is to charge a kind of minimum monthly spend fee - like a line rental - to those customers who don't make a lot of calls... that's also not great. Currently you can buy a Prepay phone, put $20 on it and then not spend anything for the rest of the year and still receive calls, TXTs, whatever. That would vanish under bill and keep.

Cheers

Paul

Paul Brislen
Head of Corporate Communications
Vodafone

http://forum.vodafone.co.nz

sep11guy

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#203451 26-Mar-2009 11:04

Let me bring this a bit on the simpler lines, back on the suggestion of the commerce commission. The cost cut is being suggested for both the Teleco's and not for vodafone alone. I see that even if you agree to the suggested rate ALONE it may not be much of a releif to the end user but it will give room for competitor ('s soon) to give a good fight. now thats were the competition should be heading.

Also you said you cant charge users monthly spend fee. I want to ask here, why is vodafone always thinking high cost ( read BIG Money!!) Let me just pull out a small example. you recharge for 20$, and then you charge 2$ per month for nothing. yes nothing for you the company but you give 300 text p.m as a service. Now this is a place were you can get more budget customers who may not be ready for the 10$ text commitment. The 300 text you give out is literally nothing in terms of operational costs - it will not BURDEN your network and also add to revenue. and who knows once they feel they use it more they may tempted to migrate to original 10$ text. OR you could even have small top ups like another 250sms for 1$.

This is just a sample and so i think there is definetly room for improvemnt if you want to work on those lines, that is.

VFNZPaulBrislen

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#203455 26-Mar-2009 11:13

sep11guy:

Let me bring this a bit on the simpler lines, back on the suggestion of the commerce commission. The cost cut is being suggested for both the Teleco's and not for vodafone alone. I see that even if you agree to the suggested rate ALONE it may not be much of a releif to the end user but it will give room for competitor ('s soon) to give a good fight. now thats were the competition should be heading.

Also you said you cant charge users monthly spend fee. I want to ask here, why is vodafone always thinking high cost ( read BIG Money!!) Let me just pull out a small example. you recharge for 20$, and then you charge 2$ per month for nothing. yes nothing for you the company but you give 300 text p.m as a service. Now this is a place were you can get more budget customers who may not be ready for the 10$ text commitment. The 300 text you give out is literally nothing in terms of operational costs - it will not BURDEN your network and also add to revenue. and who knows once they feel they use it more they may tempted to migrate to original 10$ text. OR you could even have small top ups like another 250sms for 1$.

This is just a sample and so i think there is definetly room for improvemnt if you want to work on those lines, that is.

Hi there, I'd love to argue with you but I'm really not sure what it is you're suggesting... how are we charge $2/month for nothing? How is it that TXTs don't cost us anything?

Sorry, I'm lost.

Paul

Paul Brislen
Head of Corporate Communications
Vodafone

http://forum.vodafone.co.nz

simon14

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#203460 26-Mar-2009 11:29

sbiddle:
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.

In Aussie i knwo Virgin has a plan where users have unlimited minutes to any network and landlines for $99 a month. How could they offer this if they didn't have Bill and Keep?

simon14

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#203465 26-Mar-2009 11:35

sep11guy:

Let me bring this a bit on the simpler lines, back on the suggestion of the commerce commission. The cost cut is being suggested for both the Teleco's and not for vodafone alone. I see that even if you agree to the suggested rate ALONE it may not be much of a releif to the end user but it will give room for competitor ('s soon) to give a good fight. now thats were the competition should be heading.

Also you said you cant charge users monthly spend fee. I want to ask here, why is vodafone always thinking high cost ( read BIG Money!!) Let me just pull out a small example. you recharge for 20$, and then you charge 2$ per month for nothing. yes nothing for you the company but you give 300 text p.m as a service. Now this is a place were you can get more budget customers who may not be ready for the 10$ text commitment. The 300 text you give out is literally nothing in terms of operational costs - it will not BURDEN your network and also add to revenue. and who knows once they feel they use it more they may tempted to migrate to original 10$ text. OR you could even have small top ups like another 250sms for 1$.

This is just a sample and so i think there is definetly room for improvemnt if you want to work on those lines, that is.

If Vodafone offered $2 for 300 text, it would impact them because many people would get rid of $10 text in favour of $2 text. Remember, if you send more than 50 text to Voda users a month, your better off on $10 text. I'd say most people on $10 text don't even use half their texts.

AndrewTD

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#203466 26-Mar-2009 11:36

sep11guy:

...

Let me just pull out a small example. you recharge for 20$, and then you charge 2$ per month for nothing. yes nothing for you the company but you give 300 text p.m as a service. Now this is a place were you can get more budget customers who may not be ready for the 10$ text commitment. The 300 text you give out is literally nothing in terms of operational costs - it will not BURDEN your network and also add to revenue. and who knows once they feel they use it more they may tempted to migrate to original 10$ text. OR you could even have small top ups like another 250sms for 1$.
...

I'm afraid I was equally confused by your example / suggestion here.

kind regards Andrew TD

sep11guy

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#203481 26-Mar-2009 12:46

sorry for a bit of a confusion there, I guess i will write a bit slow and elaborate from now on.

what i meant in the earlier post, when i said at no cost to the company was that its going to vodafone to vodafone anyway - even your existing 10$ text (wch is vodafone to vodafone )doesnt include other networks right?

what i meant was, like you have a branch called "superpre-pay" to have "bestmates" and "txt2K" , you could possibly have a "Lite" package werein you could have something like a 2$ deduction per month for those free 250/300 sms's i mentioned earlier.

<<<<Responding to a comment "Remember, if you send more than 50 text to Voda users a month, your better off on $10 text. I'd say most people on $10 text don't even use half their texts. "

Let me point out here, how can you justify that when the whole pricing structure is wrong. and we are talking here when there is no scene of inter telecom txt exchanges rates - its totally within vodafone and so the price can be easily dropped. >>>>>>

Now since earlier i said that this particular scheme would be under a different banner/branch(or however you coin it), and not under super prepay so there is no scope of confusion. ppl wont go off the 10$ txt cause that would be only available on super prepay. now if you (vodafone) want a catch - you just increase the call rates to 1$ ( 10 cent more assuming the current call rate is 90cents?). It does give a chance now to ppl to pounce on me, but let me clarify that this is just a one of the ways to introduce more packages and competition. + this will see that more number of ppl to take up the "Lite" option who may no be that interested in making the calls. So now you get more customers txting, + more profit on calls.

What I am trying to say here is bringing out different versions of providers like black and white, digital island(from todays paper) is not gonna make difference. Its how you price the packages. tommorrow when telcom launces is 3G there are gonna be a truck load of ppl migrating for better options. if you want to avoid that, your have to work a bit on your pricing structure and for retention. if more ppl were made aware that their phones could work on telecom as well ( like the iphones) I am sure ppl would take the jump BLIND.

I am not trying to argue with anyone but I am only putting forth my opinions and what can be done to offer more value/products to customers. I hope i have tried to explain things this time.

simon14

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#203489 26-Mar-2009 13:05

sep11guy:

Responding to a comment "Remember, if you send more than 50 text to Voda users a month, your better off on $10 text. I'd say most people on $10 text don't even use half their texts. "

Let me point out here, how can you justify that when the whole pricing structure is wrong. and we are talking here when there is no scene of inter telecom txt exchanges rates - its totally within vodafone and so the price can be easily dropped

Sure the price CAN be dropped, but why would they? They don't need to drop the price to be competitive, they already are competitive.

The point i'm making is this; why would Vodafone offer a $2 text package including 300 texts a month when this would result in less revenue for the company as many users currently on text 2000 for $10, would move down to text 300 for $2, loosing the company $8 per customer. For example if someone only sent 200 text per month they would obviously advantage from being on text 2000 for $10. If Vodaofne then offered them 300 text for $2, they would change down and save $8 a month.

Vodaofnes plans are designed to make money, sure we all want lower prices but we can't expect them to lower them just to be nice. If the market changed and other players offered better deals, then obviously Vodafone would have a strong case to offer better texting plans, but at the moment they would be stupid to.

Ragnor

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#203494 26-Mar-2009 13:24

Businesses are not charities - more news at 6 :)

sep11guy

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#203687 27-Mar-2009 10:07

From above ^^^^^^^^^^^^

Did any one get any info at 6 yday?? I just thought i may have missed something major so i thought i will ask here :)

d3Xt3r

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#203989 29-Mar-2009 15:32

^ Pardon me, but since when have the rates changed to 9.5c per message? As of today, I still get charged 20c per txt.

--

Personally, I feel that vodafone NZ is VERY expensive compared to other countries. I think the rates can be heavily cut, and it wouldn't affect Vodafone much, because that means more people would call and txt more often, and that automatically means more money. You don't always need to have competition or population as an incentive for price cuts. The current population is highly undertapped. I mean, how many people on an average do you see talking on their phones? Personally, for me, it works out to less than one per day. In other countries, its quite common to see majority of the people on a bus/train talk on the phone, during peak hours.

Wouldn't you guys talk and txt more if the prices were more reasonable? I know I for one would. As a student, I find these prices ridicuously expensive. It's not like I don't have the contacts, or time or even excuses to make a call, believe me, I do. But in the last two months, I don't think I've even made more than 3 calls! And back in my home country, I used to talk on the mobile for atleast 30 mins daily!

simon14

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#204002 29-Mar-2009 16:42

d3Xt3r:

^ Pardon me, but since when have the rates changed to 9.5c per message? As of today, I still get charged 20c per txt.

--

Personally, I feel that vodafone NZ is VERY expensive compared to other countries. I think the rates can be heavily cut, and it wouldn't affect Vodafone much, because that means more people would call and txt more often, and that automatically means more money. You don't always need to have competition or population as an incentive for price cuts. The current population is highly undertapped. I mean, how many people on an average do you see talking on their phones? Personally, for me, it works out to less than one per day. In other countries, its quite common to see majority of the people on a bus/train talk on the phone, during peak hours.

Wouldn't you guys talk and txt more if the prices were more reasonable? I know I for one would. As a student, I find these prices ridicuously expensive. It's not like I don't have the contacts, or time or even excuses to make a call, believe me, I do. But in the last two months, I don't think I've even made more than 3 calls! And back in my home country, I used to talk on the mobile for atleast 30 mins daily!

You can't compare our prices to overseas prices, they are completely different markets.

I'm sure Vodafone has a huge team of highly trained monkeys that work on their pricing... they probably know if they lower the price, sure more people will use the serivce but they won't actually make more profit so there would be no point.... at this stage anyway.

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