Own goal confirmed

May 12th, 2010 at 10:54 am by David Farrar

My prediction that ’s new calling plan for on-network calls was a massive own goal, has been proven correct. Launching the plan just days before the Minister was due to decide on the recommendation not to regulate will go down as arguably their biggest stuff up to date.

To be fair, their competitor Telecom, has many to choose from – CDMA, XT, AAPT etc etc.

The Herald reports:

Vodafone’s latest marketing deal has pushed the to backtrack on an earlier decision and it is now recommending the Government regulate mobile phone ‘termination rates’. …

In a draft report out today, the commission says earlier undertakings offered by Vodafone and Telecom would not address competition concerns.

Considering the Minister asked the Commission to reconsider its 2-1 recommendation to accept commercial undertakings rather than regulate, what is the chance he will now turn down the new recommendation to regulate? I’d say close to zero.

If Vodafone had held off their new pricing plan for a couple of weeks, I reckon there was an 80%+ chance the Minister would have gone with the recommendation to accept the commercial undertakings.

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26 Responses to “Own goal confirmed”

  1. RKBee (1,344 comments) says:

    Vodafone‚Äôs own goal proves they don’t understand the game.

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  2. gravedodger (1,566 comments) says:

    Not being a football aficionado, can a referee award a penalty in the scoring an own goal thereby making a two goal down result if the penalty is converted. Possibly a suspension for some at Vodafone as well. What timing.l

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  3. RKBee (1,344 comments) says:

    Yeah more regulation is just what a free market needs… thanks Vodafone.

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  4. expat (4,050 comments) says:

    can someone whip up one of those Hitler in the bunker spoofs. casting: hitler =VF CEO, rest of cast = marketing dept

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  5. JiveKitty (778 comments) says:

    Oh, what’s the $12 deal?

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  6. Jim (398 comments) says:

    RKBee, I’m a great believer in free markets but I do think one needs to be aware of their faults too. Most notably a free market is not a place where the best product or company wins; it is where bullying, anti-competitive, devious, lying cheating bastards win.

    Whenever I end up paying too much for a shit service or product, where it is obvious that I have been cornered into paying, then I have to accept that as a consequence of the free market.

    As long as we all understand that both free markets and over regulated markets can deliver overpriced crap. The trick is in devising rules which allow the best products to win and which do not impose a deadweight cost or drag on the market.

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  7. mjwilknz (605 comments) says:

    Forgive my ignorance of this case, but can someone explain why this announcement is an own goal? Vodafone are giving cheap calling to some of their pre-paid customers. What’s wrong with that?

    Oh, I guess they must have announced it without running it past the Government, the Commerce Commission or their competitors first. What a bugger! Anyone suggesting what we are seeing actually is a free market (one devoid of the threat of intervention) has a screw loose!

    [DPF: Phones only work if every number can call every other number. If you make it uneconomic for new entrants to call your customers, then it is not a free market - it it keeping competition out. Vodafone needs to have people choose Vodafone before they provide cheap calls, provide good service or have the best coverage. But instead in areas such as Auckland young people are effectively forced to choose Vodafone as otherwise it is too expensive for their friends to call them]

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  8. mjwilknz (605 comments) says:

    Perhaps someone can also explain why DPF, who’s normally so sceptical about government intervention, appears so quick to embrace it on cellphone regulation. Looks a fairly inconsistent to me.

    [DPF: I am not quick to embrace it. But phones only work if they can all call each other, and high MTRs are an anti-competitve device to keep competitors out and prices high. Think if you got charged 20c to send an e-mail to a customer on another ISP, and free to your own ISP. No one would stand for that]

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  9. wreck1080 (3,907 comments) says:

    MTR’s should be at cost. Maybe 1c per minute?

    Next job for the commerce commission: The electricity infrastructure.

    The reforms have been a disaster.

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  10. mjwilknz (605 comments) says:

    Thanks DPF. Can I just check what you’re saying then? Vodafone are in trouble for making it too cheap to make calls from their network. That will mean too many people join their network meaning it costs other cellphone providers more to have their users calling Vodafone customers all the time. Is that right?

    Does Vodafone charge a different termination fee to the one it pays when Vodafone customers call off-net?

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  11. mjwilknz (605 comments) says:

    @ wreck1080, why should they be even 1c? Why not zero? Why stop there? Why doesn’t the Commission force the mobile companies to charge the people receiving calls in order to pay the people placing them?

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  12. mjwilknz (605 comments) says:

    Sorry, DPF, still trying to read in between the lines here. Essentially, you’re saying that Vodafone shouldn’t be allowed to attract people to its network by offering cheap calls, that other networks should be giving the chance to “compete”. How is that not anti-competitive? Aren’t you just hurting customers by preventing a company from offering them cheap calls in order to help its competitors? I look around DPF and it looks like you are giving up your preference for the free-market in order to help out Vodafone’s competitors, at the expense of Vodafone and its customers. How would that view be mistaken?

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  13. expat (4,050 comments) says:

    yawn, mjwilknz, yawn.

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  14. mjwilknz (605 comments) says:

    Sorry to bore you, expat. Some of us care about this livelihood of this country. Others of us go, yawn, yawn!

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  15. mjwilknz (605 comments) says:

    Hey Expat, can you humour me for a sec? What rate do you think should be charged?

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  16. expat (4,050 comments) says:

    Hey mjwilknz, can you do me a favour?

    Just keep on posting to yourself.

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  17. gander (91 comments) says:

    Is this necessarily an own goal?

    Could Vodafone be envisioning a scenario in which regulation ultimately hurts Telecom more than it hurts Vodafone?

    Could this have anything to do with the Vodafone-Axia bid to set up the national fibre-to-the-premises network?

    It’s easy to put VF down for what looks to us all like comically inept timing. I’d really like to see what the telecommunications environment looks like in five years time before dismissing the pricing plan as a duff-up. (Of course, if I could see what the telecomms environment would look like five years in the future, would I be speculating about it on a blog like this?)

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  18. Anthony (796 comments) says:

    Vodafone have effectively set a retail price of 6 cents a minute for its prepay customers to call other Vodafone customers if they buy the Talk add-on. About half the cost of a mobile-to-mobile call is the cost of terminating the call – so in this case about 3 cents including GST and retail margin. Yet the charge for any other network to connect to a Vodafone customer is 14 cents a minute. How do you explain that????

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  19. Bazar (37 comments) says:

    I’d be happy to see regulation.

    Theres no such thing as cheap calling to vodaphone landlines. (Theres local, national, and international. Not Vodaphone and non-vodaphone)
    Why is there such a pricy setup with cellphones?

    The carriers have high tarrifs between one another, and i doubt any are willing to remove those taffifs, simply because it works to keep their market share (as well as passing the blame the others for high prices).

    Regulate the telecommunations, otherwise the companies will screw us left, right, and center when it comes to pricing and competition

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  20. mjwilknz (605 comments) says:

    Bazar,

    Mobile termination is only one price. If you regulate it down, won’t it just cause the phone companies to put other prices up? Cheap calling, both on-net and off-net, is one case in point. Cheap handsets are another.

    You guys seem to think that regulation means you’re getting tough on Vodafone and its competitors will benefit. I disagree; doesn’t regulation just place restrictions on how companies compete for customers? How will customers win because of that? It looks to me like you’re heading for a world full of lawyers and bureaucrat saying no, all the time. Who wants that?

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  21. mjwilknz (605 comments) says:

    Expat, are you scared of a bit of debate?

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  22. mjwilknz (605 comments) says:

    Bok, bok, bok! What’s the matter, McFly? Chicken? :-)

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  23. MikeNZ (3,234 comments) says:

    As the Nandos add goes left wing, right wing what about a bit of breast?

    You’re right mjwilknz
    the companies will try and rort the customers regardless of the regulations.
    Therefore the regulations should be written to make the costs the cheapest possible for us and to make number portability and retention easiest too. IE for our benefit.

    This is a very small market and having an oligarchy means we need someone to make surewe don’t get screwed like we are.
    Same with Electricity and God forbid water if they ever get hold of it.

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  24. mjwilknz (605 comments) says:

    @MikeNZ, welcome to the People’s Republic of New Zealand, dear leader!

    Just to clarify, which price do you want to be as cheap as possible? Mobile termination, calls, handsets? Oh, you want all of them to be cheap? Forgive this next question, but what would encourage the mobile companies to keep providing us with mobile services?

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  25. mjwilknz (605 comments) says:

    Come on, expat, come out and play again, won’t ya? I know we all like a bit of roast chicken, but I promise not to turn up the heat too much, this time. :-)

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