Not a smart call

May 4th, 2010 at 10:00 am by David Farrar

The Dom Post reports:

landline customers face a steep rise in the cost of off-peak national calls from next month.

The company is increasing the cost of calls by more than 25 per cent from 19 cents a minute to 24c. …

The company’s toll call revenues have been falling more steeply than any other major part of its business as more customers use internet phone services such as Skype, discount calling cards on sale at dairies, and a recent spate of cheap mobile offers for both overseas and national calls. …

Slingshot, the third biggest residential phone provider, has peak and off-peak national toll calls for 8 cents a minute.

Hmmn you’re losing money because customers are using cheaper services such as Skype, calling cards or competing toll providers.

So your response is to put prices up, so even fewer customers will use you!

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25 Responses to “Not a smart call”

  1. Murray (8,835 comments) says:

    NEVER NEVER NEVER let accoutants make marketing decisions.

    Ever.

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  2. Viking2 (10,723 comments) says:

    You aint thought about it have you. Packages including broadband with low or no tolls costs.

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  3. berend (1,601 comments) says:

    I’m with Vodafone and have free local/national calls. Orcon offers this as well. But the interesting thing is: if Telecom puts up the price, do Vodafone/Orcan have to pay more to Telecom?

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  4. Fletch (5,723 comments) says:

    It all seems to be user pays over at Telecom now as well. I recently got broadband and I had my first problem with it (my online usage was way over – a mistake by Telecom). In any case, the guy I was talking to from Telecom put through a service request or whatever they call it, but he said something to the effect that I should be aware that this was my one free request? And to acknowledge that to him…

    So…I’m thinking next time something goes wrong with my broadband that is not my fault, it looks like I will be charged for them looking into it. In my opinion it is a very poor way to run a business.

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  5. ben (2,386 comments) says:

    On recent form, Steven Joyce will look at this hike in the price of landline toll calls, and demand that the mobile termination rate be further regulated.

    And all the anti-Telecom idiots here will no-doubt cheer madly.

    As Viking points out, there is more here than meets the eye – it’s not your average broadband user that gets caught.

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  6. wreck1080 (3,523 comments) says:

    The only thing keeping telecom alive today is their strangle hold on local loop.

    They are desperate – and don’t quite know what to do.

    Their share price tells the story.

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  7. ben (2,386 comments) says:

    So…I’m thinking next time something goes wrong with my broadband that is not my fault, it looks like I will be charged for them looking into it. In my opinion it is a very poor way to run a business.

    Assuming this is a home line you are talking about, you are protected by the Consumer Guarantees Act. It has to be fit for service. If it breaks and its their fault you can’t be charged (or at least made to pay).

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  8. David in Chch (503 comments) says:

    “Hmmn you’re losing money because customers are using cheaper services such as Skype, calling cards or competing toll providers.

    “So your response is to put prices up, so even fewer customers will use you!”

    Got it in one, DPF! Spot on. I haven’t used Telecom for years, and use Skype and calling cards for all of my overseas calls.

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  9. freedom101 (439 comments) says:

    Commercially, in the short term at least and as a revenue maximiser, it may not be a bad move. No matter how low it goes Telecom won’t be able to complete with Skype etc, so why try? Much better to put prices up, knowing that 80%+ of users either won’t know about alternative providers, won’t know it’s happened or don’t understand how to use Skype etc.

    VOIP is going to kill analogue completely in the medium term, so Telecom might as well extract as much cash as it can right now. It ain’t going to last either way.

    So all in all, probably a good move by Telecom.

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  10. Lance (2,309 comments) says:

    Sad thing is if you think Telecom are the only grossly incompetent crew, think again.
    My recent experience with Vodafone mobile is truly mind boggling in its utter mindlessness.

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  11. s.russell (1,486 comments) says:

    freedom101,
    You are exactly right (alas) , having said exactly what I was about to say, only better.

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  12. David in Chch (503 comments) says:

    Unfortunately freedom101, you are probably right, and Lance – my experience as well. I had Vodafone/iHug for a year, and got out as soon as I could when the contract ended. I am much happier with TelstraClear, although I am aware of others who have had problems with them too.

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  13. scrubone (2,971 comments) says:

    I think their policy is more about getting money from the market share they still have – most people who can use skype probably already have it. Let’s face it, they’re in a no win situation.

    On the other hand, someone was selling me on World Exchange – sounded good. Anyone had experience with switching their phone to them?

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  14. RKBee (1,344 comments) says:

    Will this Phuck up by telecom effect Paul Roynolds $7 million salary and incentive package.

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  15. coge (160 comments) says:

    Labour unions & greens say “Buy back Telecom!” Bring back 1972!

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  16. Monty (947 comments) says:

    “don’t panic – don’t Panic” – Do that have Mr Mannering from Dad’s army running the place now?

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  17. ChrisB (5 comments) says:

    One would think that Telecom would be able to provide the cheapest service in NZ for all phone related products as they own the bulk of the stuff.
    I recently changed to Farmside and they went through Telecom to set up Broadband. Their toll rates and line rentals are way cheaper than Telecom.

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  18. ben (2,386 comments) says:

    Will this Phuck up by telecom effect Paul Roynolds $7 million salary and incentive package.

    Er… relevance?

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  19. Rex Widerstrom (5,127 comments) says:

    ben suggests:

    …all the anti-Telecom idiots here will no-doubt cheer madly.

    As Viking points out, there is more here than meets the eye – it’s not your average broadband user that gets caught.

    Perhaps the “anti Telecom idiots here” are people, like myself, who have broadband, know how to use Skype etc etc… but realise that not everyone does. People like my elderly parents, for instance, who will now have to pay extra to call my brother and his wife in Auckland. Or the poor, who can’t afford broadband but want a phone to keep in touch with their families.

    Not everyone is a middle class white nerd, you know.

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  20. insider (990 comments) says:

    I get calls to the UK and US for only 8c/m through telecom. I can’t see the hassle of skype being worth it.

    You’re always going to get niche providers who will undercut on certain products. But do they give the range and how many other bits and pieces do you need to add on? Convenience sometimes has a cost

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  21. PaulL (5,775 comments) says:

    RKBee:

    Will this Phuck up by telecom effect Paul Roynolds $7 million salary and incentive package.

    Almost certainly not. It may affect it though.

    I am with freedom101. It is probably astute by Telecom. If you assume almost everyone who is going to move to VOIP has already done so, it makes sense to rape and pillage those who are remaining – they’ve already demonstrated they’re not going to move.

    If the new broadband network comes into being (I’m dubious….but it might) then the local loop will be gone anyway. Telecom may as well make hay while the sun shines, and invest that money into a long-term business model that will keep them alive.

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  22. expat (4,048 comments) says:

    at what price point do apathetic consumers get off their collective arses and change providers or get skype?

    25c a minute for a local landline call ie inside NZ must be pretty close to engaging movement considering you can call the other side of the planet for approx. 25c a min.

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  23. Viking2 (10,723 comments) says:

    I read yesterday that Telecom is just over half way with its installation of cabinets. I also read today that Lucent Alcatel their partners have now run 300 Mps over copper for 500 metres. Does anyone think that Telecom are giving up?
    Both my connections now run at 100 mps. Given that Telecom have a bunch of fibre in the ground and that it will have a lot more before the Govt. actually does anything I’d say the picking of the bones will be uneconomical area’s.
    So apart from a few small area’s Telecom are still going to own the means of transport.
    Problem will be that the socialist govt. will control their revenue.
    Farmers govt.’s have done this for 100 years. Think things like price control on say wheat and flour. Stuffed the industry as these things do. Same old shit all over again.

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  24. PaulL (5,775 comments) says:

    Viking2 – old ground mate. There’s nothing I can conceivably do in my home today, or in sight for the next 5 years, that uses more than 100Mbps. And I can easily get 100Mbps over copper today, in 5 years I’ll be able to get 300Mbps or 1Gbps. In my mind, fibre to the home is a complete waste of money.

    Hence my caveat on thinking it will never happen.

    It will get redefined to “most homes in NZ have ultra-fast broadband” and “it isn’t the job of the govt to dictate the exact technology” and “ultra fast broadband means at least 100Mbps”. At that level, anybody using consumer grade gear:
    – can’t distribute that speed over wireless – their home network (802.11g) is running at 56Mbps, real throughput more like 30Mbps
    – can’t distribute that speed over wired ethernet (and who has that any more anyway) – standard ethernet is 100Mbps, but really only delivers half that
    – can’t write it to a hard drive – no consumer grade hard drives can write 100Mbps sustained
    – can’t put it on a tv – even a high end HD signal is only around 10Mbps

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  25. Anthony (736 comments) says:

    WorldxChange provide my tolls and they are reasonably cheap – certainly a lot cheaper than Telecom particularly for fixed-to-mobile calls. Can’t say much good about their variable broadband performance – although their data charge is $1 a GB.

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