[TelstraClear] Telstra clear add about taxpayer paid for broadband?

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#466101 6-May-2011 10:50

goatboy: Pretty straightforward. Government is giving the providers of the UFB (LFCs or Local Fibre Companies) a 10 year period where they can charge whatever they like for services delivered over it.

I was under the impression that there is to be a cap on wholesale prices. Is that not the case?

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Beccara

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#466105 6-May-2011 10:54

That is the case, The contracts specifies the the most a LFC can charge for a service. There is also a clause making the LFC bound to offer Service X at Price Y to all RSP, They aren't allowed to do special's for just one RSP

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DonGould

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#466464 7-May-2011 14:13

Key issue with unregulated UBF is under charging not over charging.

LFC's may decide that they need customers so drop the cost of services to $5 to get on-ramp.

So, what you get today on DSL for $30 you can get on fibre for $7.50.

Think about it. This regulation goes both ways.

D

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Ragnor

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#466544 7-May-2011 19:31

How is lower prices than the max in their contracts from LFC's to ISP's an issue at all?

DonGould

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#466548 7-May-2011 19:42

Ragnor: How is lower prices than the max in their contracts from LFC's to ISP's an issue at all?

Say Orcon puts a VDSL2 dslam in my local telecom cabinet and picks up 30 customers (10% of the market).

Orcon throws 60/30 at the market for $75/m with 40Gb of data.

Then the LFC comes alone and offers up 150mbit to Slingshot for $10 a month wholesale.

What retail point will Slingshot bring that product to the market at?

Sling shot throw 150/50 at the market for $75 with 40Gb of data... but we know that at 150/50 the customer will chew to 80Gb a month within months of the speed upgrade.

However the LFC can do this because they've done a 20year budget of 1000/400 speeds within 5 years, so 150/50 to seed the market at $15 is justfified as they're proposing to sell 1000/400 to the market at $80 wholesale in 3 years...

See where I'm going?

The LFC wants those customers off the copper network, so they'll buy them with great start up offers the same way any new provider does in the market.

Give them a regulatory holiday over 10 years and they can drop their pants without the ACCC being able to touch them for under cutting the whole market.

Or am I just reading this upside down?

D

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antoniosk

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#466558 7-May-2011 20:32

DonGould:
Ragnor: How is lower prices than the max in their contracts from LFC's to ISP's an issue at all?

Say Orcon puts a VDSL2 dslam in my local telecom cabinet and picks up 30 customers (10% of the market).

Orcon throws 60/30 at the market for $75/m with 40Gb of data.

Then the LFC comes alone and offers up 150mbit to Slingshot for $10 a month wholesale.

What retail point will Slingshot bring that product to the market at?

Sling shot throw 150/50 at the market for $75 with 40Gb of data... but we know that at 150/50 the customer will chew to 80Gb a month within months of the speed upgrade.

However the LFC can do this because they've done a 20year budget of 1000/400 speeds within 5 years, so 150/50 to seed the market at $15 is justfified as they're proposing to sell 1000/400 to the market at $80 wholesale in 3 years...

See where I'm going?

The LFC wants those customers off the copper network, so they'll buy them with great start up offers the same way any new provider does in the market.

Give them a regulatory holiday over 10 years and they can drop their pants without the ACCC being able to touch them for under cutting the whole market.

Or am I just reading this upside down?

D

I'm sure many providers who enter into UFB will use suicide pricing to try and win market share. There's no law that stops stupidity, nor should they be - idiot companies who sell on price only deserve what they get.

Imagine it's not Callplus or Orcon who offer suicidal rates.

Pretend instead that it's Telecom Retail. With their market dominance - remember, xtra is still a huge force - they could offer a $9.95 all you can eat plan. This is called 'dumping', and the Commerce Commission can be called in if a dominant player is doing this.

IF the Commerce Commission remains in place.

NZ is a capitalist market, and focus and energy is on business generation and profit maximisation. AS IT SHOULD BE - it creates focus, drives innovation and generates employment. Some companies create true assets while others compete solely to make profit and create no value.

Government needs to create that environment but also ensure there are strong institutions in place to keep a check on the market and reign in excesses.

Look at the weakness in financial markets, and the nonsense of the finance companies that took out $20BN of NZ'rs savings, again. That's a sign of weak regulation (among other things) but in response Government is beefing up regulation, not suspending it.

The Commerce Commission is slow, ponderous, and backwards looking. But it has teeth, and can hold the industry to account, as it has shown.

A

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Antoniosk

tdgeek

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#466575 7-May-2011 21:36

Off topic but I hate this argument "but we know that at 150/50 the customer will chew to 80Gb a month within months of the speed upgrade.
"
Thats cobblers. If you consume 40Gb of data per month, then the speed is increased. Your usage won't increase due to the speed increase, not unless you download data for the sake of it. Yes, there will be a very minor increase in the case of surfing, if you can surf a few more websites per hour, but even then the speed increase wont affect your reading speed of a webpage. Same for Youtube

richms

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#466740 8-May-2011 13:45

tdgeek: Off topic but I hate this argument "but we know that at 150/50 the customer will chew to 80Gb a month within months of the speed upgrade.
"
Thats cobblers. If you consume 40Gb of data per month, then the speed is increased. Your usage won't increase due to the speed increase, not unless you download data for the sake of it. Yes, there will be a very minor increase in the case of surfing, if you can surf a few more websites per hour, but even then the speed increase wont affect your reading speed of a webpage. Same for Youtube

It will, if slingshot could deliver it, I would do a lot more traffic then I do at the moment. turning youtubes down to 360 etc is more a function of it becoming usable at the low quality than wanting to save data.

With multi megabit connections that actually work at a few megabits most of the time, things become possible which are not on todays few megabit connections that seldom deliver on that.

Richard rich.ms

Beccara

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#466744 8-May-2011 13:55

antoniosk:
DonGould:
Ragnor: How is lower prices than the max in their contracts from LFC's to ISP's an issue at all?

Say Orcon puts a VDSL2 dslam in my local telecom cabinet and picks up 30 customers (10% of the market).

Orcon throws 60/30 at the market for $75/m with 40Gb of data.

Then the LFC comes alone and offers up 150mbit to Slingshot for $10 a month wholesale.

What retail point will Slingshot bring that product to the market at?

Sling shot throw 150/50 at the market for $75 with 40Gb of data... but we know that at 150/50 the customer will chew to 80Gb a month within months of the speed upgrade.

However the LFC can do this because they've done a 20year budget of 1000/400 speeds within 5 years, so 150/50 to seed the market at $15 is justfified as they're proposing to sell 1000/400 to the market at $80 wholesale in 3 years...

See where I'm going?

The LFC wants those customers off the copper network, so they'll buy them with great start up offers the same way any new provider does in the market.

Give them a regulatory holiday over 10 years and they can drop their pants without the ACCC being able to touch them for under cutting the whole market.

Or am I just reading this upside down?

D

I'm sure many providers who enter into UFB will use suicide pricing to try and win market share. There's no law that stops stupidity, nor should they be - idiot companies who sell on price only deserve what they get.

Imagine it's not Callplus or Orcon who offer suicidal rates.

Pretend instead that it's Telecom Retail. With their market dominance - remember, xtra is still a huge force - they could offer a $9.95 all you can eat plan. This is called 'dumping', and the Commerce Commission can be called in if a dominant player is doing this.

IF the Commerce Commission remains in place.

NZ is a capitalist market, and focus and energy is on business generation and profit maximisation. AS IT SHOULD BE - it creates focus, drives innovation and generates employment. Some companies create true assets while others compete solely to make profit and create no value.

Government needs to create that environment but also ensure there are strong institutions in place to keep a check on the market and reign in excesses.

Look at the weakness in financial markets, and the nonsense of the finance companies that took out $20BN of NZ'rs savings, again. That's a sign of weak regulation (among other things) but in response Government is beefing up regulation, not suspending it.

The Commerce Commission is slow, ponderous, and backwards looking. But it has teeth, and can hold the industry to account, as it has shown.

A

I was under impression that it is the LFC that would be exempt from comcom oversight not the RSP's, In your example Telecom Retail would still be held to account by the comcom

DonGould

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#466888 8-May-2011 20:04

Beccara: I was under impression that it is the LFC that would be exempt from comcom oversight not the RSP's, In your example Telecom Retail would still be held to account by the comcom

If the LFC sells a product to the RSP for $2 and the RSP sells it for $4, that's 100% mark up. I'm not sure what issue the ComCom can have with that.

If the LFC says it will offer volume discounts:

1 - 50 connections = $50
50 - 150 = $40
150 to 500 = $30
500+ = $2

... the LFC can do that because it has a regulatory holiday, or have I got this wrong?

Can Telecom Retail find 500+ customers?

Can I find 150 customers?

Can Orcon, Slingshot, Woosh [1]?

In this abstract example, it strikes me that the RSP who can get 501 customers can sell at $4.

I can see why Telstra might have real issue with this. The DSL/copper is regulated already. They'd have to drop the cost of their cable to $2.50 to compete.... or just give it away free and sell services on it.

I can see why Orcon, Slingshot and Woosh would be worried... they're out of business.

D

[1] Please don't get hung up on the names - I just picked some random ISPs that we all know that are not LFC's and aren't Telelcom or TelstraClear.

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Beccara

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#466907 8-May-2011 21:10

That is a question that can't be answered right now, the LFC/RSP contract is still being worked out and as such everyone involved is under an NDA

BarTender

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#466908 8-May-2011 21:12

My wife just didn't get the advert at all.

She said "But wasn't it a Rugby World Cup advert? since that guy from 3 News was in it". ROFL

I love her so much and she hit the nail on the head.

Rubbish advert, confusing link from a non-existant web-site redirecting to Facebook with a vague post where there is only 4 comments.

I say #fail myself.

Yes I can see why Retail ISPs are worried as the comments here are well thought out and argued.

Shame TCL wasted money on a guerilla marketing campaign that is so esoteric that no one gets it.

I spent 3 1/2 mins on hold waiting for reception at TCL Wellington's office on Friday (not helpdesk, to ring an employee who is a friend of mine) let alone the 45+ mins I have waited on hold trying to get hold of someone from tech support. Perhaps the Marketing budget could have been better spent elsewhere?

DonGould

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#466911 8-May-2011 21:16

BT your whole post is funny! Top skills dude!

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NonprayingMantis

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#466927 8-May-2011 22:17

DonGould:
Ragnor: How is lower prices than the max in their contracts from LFC's to ISP's an issue at all?

Say Orcon puts a VDSL2 dslam in my local telecom cabinet and picks up 30 customers (10% of the market).

Orcon throws 60/30 at the market for $75/m with 40Gb of data.

Then the LFC comes alone and offers up 150mbit to Slingshot for $10 a month wholesale.

What retail point will Slingshot bring that product to the market at?

Sling shot throw 150/50 at the market for $75 with 40Gb of data... but we know that at 150/50 the customer will chew to 80Gb a month within months of the speed upgrade.

However the LFC can do this because they've done a 20year budget of 1000/400 speeds within 5 years, so 150/50 to seed the market at $15 is justfified as they're proposing to sell 1000/400 to the market at $80 wholesale in 3 years...

See where I'm going?

The LFC wants those customers off the copper network, so they'll buy them with great start up offers the same way any new provider does in the market.

Give them a regulatory holiday over 10 years and they can drop their pants without the ACCC being able to touch them for under cutting the whole market.

Or am I just reading this upside down?

D

You could well be right, I don't know enough about the fibre situaton to know either way.

However I do think it is quite amusing that for the last 10-20 years people have moaned about how the network provider (telecom) has made broadband far too expensive and that has discouraged uptake and generally screwed with the NZ economy.
Now we have people (maybe different people) moaning about how the future network provider (which could also be telecom, we don't know yet) might decide to make broadband much cheaper to encourage massive uptake,and somehow that is a really terrible thing too. I guess you cant please everyone.

DonGould

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#466931 8-May-2011 22:30

NonprayingMantis: You could well be right, I don't know enough about the fibre situaton to know either way.

However I do think it is quite amusing that for the last 10-20 years people have moaned about how the network provider has made broadband far to expensive and that has discouraged uptake and generally screwed with the NZ economy.
Now we have people (maybe different people) moaning about how the future network provider (which could also be telecom, we don't know yet) might decide to make broadband much cheaper to encourage massive uptake,and somehow that is a really terrible thing too. I guess you cant please everyone.

Yip, we could end up seeing a bumper time for consumers but a whole truckload of investment value go down the tubes.... but that's not really very likely in the telco sector... is it?

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