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Topic # 8419 28-Jun-2006 10:18
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Free TXT wekends now extended until 31/10/06

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  Reply # 39906 28-Jun-2006 10:48
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That is good news in a way, I still personally would liked to of seen something new come out thats better than $10 text, they may instead just try to push more people onto plans.

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  Reply # 39912 28-Jun-2006 10:57
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DjShadow: ...I still personally would liked to of seen something new come out thats better than $10 text, they may instead just try to push more people onto plans.


Agreed.

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  Reply # 39938 28-Jun-2006 13:35
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Who cares, it's free txt!!! FREE!!! Meaning you don't pay anything, so it's got to be good.

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Reply # 39940 28-Jun-2006 13:37
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indapie2000: Who cares, it's free txt!!! FREE!!! Meaning you don't pay anything, so it's got to be good.


Good for the consumer, but not so good for Vodafone (in terms of retail TXT revenue). Still well done to Vodafone for extending the offer.

Cheers









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  Reply # 39943 28-Jun-2006 13:39
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I wish they had done something a bit more innovative as well, such as maybe a $2 TXT weekend for say 100 TXT's to both Vodafone and Telecom. The interconnection rate between Vodafone & Telecom is now peanuts so it could be done but I guess that would be called innovation - a concept the old Vodafone understood but the new Vodafone doesn't.

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  Reply # 39948 28-Jun-2006 13:51
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My main criticism is that they seem to be perpetuating the deadlock between themselves and Telecom, neither side wants to lead with anything better than $10 txt. Where is the hardcore competition? 

I thought proper competition would have seen vodafone undercutting or matching Telecoms $10 txt deal...



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  Reply # 39950 28-Jun-2006 13:55
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retardinator:
I thought proper competition would have seen vodafone undercutting or matching Telecoms $10 txt deal...



Undercutting competitors on pricing doesn't do anything. How companies become successful is by creating a point of difference rather than getting involved in price wars. Unfortunately ulike the old days there aren't big points of difference between networks now except for handsets (but many might argue that as well).

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  Reply # 39955 28-Jun-2006 14:19
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sbiddle: Undercutting competitors on pricing doesn't do anything. How companies become successful is by creating a point of difference rather than getting involved in price wars. Unfortunately ulike the old days there aren't big points of difference between networks now except for handsets (but many might argue that as well).


How can it not do anything? that conflicts heavily with the economic laws of supply and demand.

I don't think that many care what point of differences there are in networks (if any like you said) when all they may want to do is send text messages.

I also consider there to be important differences in the networks, such as speed, and that in this 'good old present' still have an influence on how customers choose where they are going to spend their money.

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Reply # 39956 28-Jun-2006 14:46
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Price wars will do either company little good, and the consumer will only gain in the short run.

If Vodafone was to undercut Telecom's $10TXT deal, then Telecom would undercut Vodafone’s deal, and so on, driving down revenues. If revenues where driven to the point of normal profit or even subnormal profit then Vodafone or Telecom may choose to exit the mobile market, now of course we all know that would not be good for consumers. This is the long run situation if a price war was to occur. In short innovation will win customers; price points only offer short term gains. Look at the retail market for oil, if Shell was to lower their prices today, then BP, Mobil etc would follow, they have to otherwise a logical consumer would purchase the petrol from Shell. Same thing applies here, to a point.

Cheers








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Reply # 39964 28-Jun-2006 15:42
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I don't consider either company silly enough to put itself into a position of severe financial risk they too are conforming to the economic laws of supply and demand.  While saying that however I believe that there is more scope for competition in this industry. 

Lets say a pricewar does occur though and 'oh no' one does pull out of the market. So what? this leaves a gap for others to fill it's place. The company may sell the their network and equipment to competitors rather than having it sit idle, or other competitors may come and build a network of their own, econet for example (I think they are starting to build a network in auckland?).

The world already knows that New Zealand consumers are getting the short end of the stick (New Zealand's cellphone call prices are the highest of any country in the OECD - for crying out loud) the oppurtunity for international competitors to enter the market if Vodafone or Telecom pull out is there and they know it.


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Reply # 39970 28-Jun-2006 16:47
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I was merely pointing out the flaws in your 'economic' argument, in any imperfect form of completion, there are barriers to entry.

One of the characteristics of a monopoly, or any other form of imperfect competition is they as a firm are able to set the price or the quantity supplied to the market, but not both. I don’t believe you will see price competition in the NZ market, and if prices are lowered by one Telco, the others will follow. Now that’s basic economics and the laws of supply and demand.

As many others have said around here, Econet, I'll believe it when I see it. I have a feeling that Econet is not all it's cracked up to be?? Allot of talk, and far less action.

Cheers







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  Reply # 39972 28-Jun-2006 16:56
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nzbnw: I was merely pointing out the flaws in your 'economic' argument, in any imperfect form of completion, there are barriers to entry.


From my perspective there was no flaw in that argument, if a price war forces a competitor to fail, then good, as I hypothesise others will move in to take their place. I do however understand your perspective and respect that.


As many others have said around here, Econet, I'll believe it when I see it. I have a feeling that Econet is not all it's cracked up to be?? Allot of talk, and far less action.


I am of the same opinion, however they were an example of a competitor building their own infrastructure…


Cheers
You're welcome?

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Reply # 40005 28-Jun-2006 20:04
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retardinator:

I don't consider either company silly enough to put itself into a position of severe financial risk they too are conforming to the economic laws of supply and demand.  



It sounds as if you haven't actually read the article that you have linked to above. In particular, I suggest you read the following:
In a situation in which there are many buyers but a single monopoly supplier that can adjust the supply or price of a good at will, the monopolist will adjust the price so that his profit is maximized given the amount that is demanded at that price. This price will be higher than in a competitive market.

Obviously the telephone text messaging market in New Zealand is not a monopoly but it is a duopoly, in which market efficiency falls somewhere between that of a monopoly and that of perfect competition.


The world already knows that New Zealand consumers are getting the short end of the stick (New Zealand's cellphone call prices are the highest of any country in the OECD - for crying out loud) the oppurtunity for international competitors to enter the market if Vodafone or Telecom pull out is there and they know it.



It's reasonable to expect that our telecommunications pricing would be much higher than the OECD average, because New Zealand is so sparsely populated compared with European countries.

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Reply # 40015 28-Jun-2006 21:10
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retardinator: From my perspective there was no flaw in that argument, if a price war forces a competitor to fail, then good, as I hypothesise others will move in to take their place. I do however understand your perspective and respect that.


But you see that either Telco would not let this happen, as I have said a price was is not in the best interest of either Telco, and really not for the consumer. If one player was to leave the mobile market and another enter, all that really says is we could have had three players, but we still have two. I too believe in the principles of free market, where if a business fails through competition then so be it, which can happen when you have a one larger player and a few smaller players with the later usually having deeper pockets.

I am of the same opinion, however they were an example of a competitor building their own infrastructure…


This is true, and we can't knock them back on that one.


You're welcome?


Anytime Smile








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Reply # 40039 29-Jun-2006 02:48
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ALASTA: It sounds as if you haven't actually read the article that you have linked to above.


In it’s context (advising those who do not know what the Law of Supply is or what the Law of Demand is) it was relevant and applies to this discussion!?

ALASTA: Obviously the telephone text messaging market in New Zealand is not a monopoly but it is a duopoly…


Elementary.

ALASTA:…in which market efficiency falls somewhere between that of a monopoly and that of perfect competition.

…I couldn’t imagine it being anywhere else in that spectrum… :/


ALASTA:It's reasonable to expect that our telecommunications pricing would be much higher than the OECD average, because New Zealand is so sparsely populated compared with European countries.


Wrong.

Firstly: I consider it more relevant to compare the proportion of cellphone users in a country rather than the population as a whole.

Secondly: I believe it would be relevant to compare ourselves to countries with similar attributes.
In this regard, perhaps Norway, Denmark and Ireland would be prime candidates for this, considering their geographic and demographic similarities to New Zealand.

The statistics in the picture below (click to enlarge) are pertinent to this discussion.

Proof of reasoning

It clearly shows New Zealand is behind other countries that we should compare ourselves too within the OECD, By being the lowest in each instance of OECD price rank for low, medium and high users.

Each type of user also spends more as a percentage of GDP per capita, despite the fact we have the lowest mobile penetration of all comparable countries!?!

Why is this reasonable to expect? Especially also when New Zealand’s urbanisation is 86 percent (the highest of the comparable countries)…Hmm…you would expect mobile network providers (MNP's) to focus infrastructure development in urban areas…oh wait…they do! so they can achieve economies of scale and usually increase profits without having to invest a proportional amount in the input side of service production. Potentially MNP's in New Zealand have more economies of scale than that of the other comparable countries in the OECD.

ALASTA: It's reasonable to expect that our telecommunications pricing would be much higher than the OECD average, because New Zealand is so sparsely populated compared with European countries.


Clearly now this is not reasonable to expect. New Zealanders should be getting a better deal than this.

Alasta, this document may be of interest to you. It is also where I managed to source all of the data above.

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