How to solve the problem [Archive]

plug

03-08-2003, 02:21 AM

It's amazing when you think what technology brings to the human race. Today technology kicks up a storm. Technology is the foundations of our existance today, making life easier, better, cheaper, more pleasurable, etc. The bottom line is that it improves our lives, dramatically.

I would also sincerely like to believe that the technology available to all of us today would be the cause of a free market and real competition. Competition drives all competitors to improve, evolve and ultimately create better values for all as fast as possible.

Let's take for example a company like FEDEX. If only FEDEX were allowed to provide a courier service, then they would have a monopoly. Thus in turn would create a situation where they charged what they like. There would be no reason to improve their service other than the mere thought that an improvement would well be 'an. In this situation an improvement would actually not be an improvement because it would ultimately only cost the company money to make the improvement. They could use it for an excuse to charge more money for the improved service, but they ultimately have a monopoly and could logically charge what they wanted.

With this in mind I think that there is not really a big difference between Telkom and the scenario above.

What we need is a couple of operators fiercely fighting to keep their customers happy. With careful thought, planning and the principles of an open free market I believe that this can be a reality. ADSL-provision-competition wars are raging in some parts of the first world right now were you can get ADSL for pennies.

South Africa has the demand because Telkom did not expect the massive response to ADSL. It looks like they were totally unprepared for the uptake and that’s probably why we have port capping and 3gig caps. This web site is a testament that most users are unhappy with ADSL.

Why is it such an issue to get extra operators. If an operator can't deliver, then the consumer will make the final decision and not use the service. I don't think it's really up to anybody to say who may or may not be operators. The final decision lies in the hands of the consumer. With a wide choice of what service to use the loosers will be loosers and the winnners will be the winners.

Jerrek

03-08-2003, 03:49 AM

This is some trivia, for those of you that want to know more about the history of telecommunications and monopolies.

The story starts way back, in the 1800s. In the United States, companies were contracted to build railroads. In Europe, the government owned and operated the railroad. This fundamental difference lead to some interesting differences between the two continents.

A fundamental problem with railroads is how to get two trains to use the same rail without causing an accident. Because of this problem, companies started putting plain copper wires along the tracks. The idea was to be able to signal the other station when a train leaves, and to signal when it arrives.

Well, it worked. The owners of the railway stations started thinking, and one of them came up with a brilliant idea. Use Morse code to send messages! So now you could actually send messages such as "train delayed by 10 minutes" or something like that. Another good idea was to sell this service to the general public, and lo and behold, the telegraph was invented.

Telegraphs were initially sent from railway to railway station. In the United States, because railroads were privately funded, owned, and operated, the companies were responsible for telegraphs. In Europe, the government operated the telegraphing service.

This eventually lead to the telephone. AT&T stands for American Telephone and Telegraph. Because seveal hundred companies were now doing telegraphing and telephony service, a standard had to be created. A few decades ago, Bell Labs sat down and created what is known today as the North American Numbering Plan. It basically states that the continent would be broken up into areas, and each area would get a three digit area code. Inside an area you would get an exchange, and each exchange would get a three digit code. And each exchange would have 9,999 line numbers. Hence, *all* telephone numbers in North America is of the form NPA-NPX-XXXX. In this documents drawn up by Bell Labs they discussed other issues such as local carriers, long distance carriers, and how companies would work together. This resulted in a time of competition between the hundreds of telephone companies.

In Europe, a different story. Since the <b>government</b> controlled the railroads, most, if not all, countries in Europe ended up with a "national" telecom controlled by the government. Now government is good for lots of things, but managing and implementing a national telecommunications infrastructure isn't one of them. This created several issues:

1) Governments have a habit of not agreeing with neighboring governments. France had an idea of how to implement a telecommunications infrastructure, but the Italians firmly believed their idea was superior, and the Germans hated Italy and decided to screw it and do something else. None of the countries could agree on anything. So, today we see the fruits of such an endeavor. A dog's breakfast.

In Europe, you have city codes, area codes, exchange codes, line codes, region codes, and whatnot. They are all of different length and different size, between countries, and some even between regions within the country. So in England you can have city or area codes that are anything from 1 number in length to 7 numbers in length, and telephone numbers itself that are anything from 2 to 9 numbers in length. Parsing a number is a nightmare because you have no idea where the area code ends and the exchange code begins. This is compounded by different structures between different countries. And now imagine Lucent or Nortel trying to build telecom switches to route phone calls...

2) Government isn't all that ... efficient. A monopoly is bad enough, but having it run by the government is just stupid. In the end politics interfere, government doesn't have enough money, or simply charges too much.

3) Monopolies are hard to get rid of because of the barriers to entry into the market. A potential competitor will have to build up an infrastructure and prove that he is better. This requires a lot of money, and lots of confidence from investors.

Government monopolies, on the other hand, is virtually impossible to get rid of. To this day you still have France Telecom, Telecom Italia, and British Telecom. Some of the European countries have allowed for *some* entry into the market, but I believe it is limited and not very well implemented.

So what is the final picture? In North America you have little wars going on between telecom companies.

- Local service is at a point where there is no profit margin in it anymore. Local service includes free local calls, and features such as caller ID, call waiting, call forwarding, voicemail, and so forth. You will not find a lot of companies advertising to become your local carrier. I can pick from Bell Canada, Sprint, AT&T, and a number of others, but they all offer the same thing for about the same price.

- Long distance service is probably one of the most competitive industries in North America. The <b>cost price</b> of a carrier to terminate a call anywhere in North America is US$0.02 a minute at max, sometimes less. That means anything over 2 pennies a minute is profit for the company(ies) involved in completing your call. You can get just about any package for any type of user from any of the thousands of companies. At this time the competition is so fierce that companies are bundling other services with it.

For example, MCI just introduced "The Neighborhood." For $49.95 a month, you get unlimited local calling, unlimited United States calling, call waiting, caller ID, speed dial, 3-way calling, and voicemail.

AT&T has an unlimited U.S. package for $19.95 a month. IDT has 5¢ a minute anywhere in the U.S., anytime. I personally use a company that charges 4¢ (United States pennies) a minute for anywhere in the United States and Canada.

International caller? No problem. Unlimited Europe for $29.95 a month. Unlimited Mexico for $49.95 a month. Unlimited Caribbean for $69.95 a month. Unlimited Brazil for $99.95 a month.

Sometimes it is even funny to see how they argue and try to lure you away from your existing long distance provider. I get at least twice a month a call from Bell or Primus that wants me to switch to them because they have "a better deal." Primus usually offers the lowest rates, but Bell offers stuff like "$100 credit to switch, plus if you remain with us for 6 months we will calculate how much you spent in phone bills and deduct 10% of that off your bill for month 7."

Just for sake of comparison, here is my telephone rates, in C$ (C$1 = R5.30)

- United States and Canada - 4.9¢ (R0.26) per minute
- United Kingdom, France, most northern European countries - 4.9¢ (R0.26) a minute
- Australia - 7.4¢ (R0.39) a minute
- South Africa - 14.5¢ (R0.77) a minute

Competition is vital.