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