Call rate reductions not likely from mobile providers

sand_man

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Well of course not!!! If you were offered R250k year end bonus vs R100k year end bonus what you going to take??
 

nolo

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and they milking us as usual unless you are their employee or one
who gets to use the company cellphone for free.....

My friend is a vodacom employee who enjoys these benefits ....
the lesson here is become telecommunication company employee
and you will not cry like the rest of South Africa about your phone rates
 

K3NS31

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Well, I'm guessing certain operators will have no choice but to lower rates (Virgin). Good news for some of us.
Besides, I wouldn't be surprised to see lower prices from Cell C too. Which I guess also means Red Bull Mobile will lower.
None of the other companies need to lower their prices, so why would they?
 

lucifir

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“As you know, reductions in termination rates do not produce savings for Vodacom to pass on to customers - in fact, the opposite is true,” explained Vodacom spokesperson Richard Boorman.
how can the opposite be true?? surely u are paying less to MTN/CellC/8ta for each call to them .. so u are saving .... damn I hate the spoke people ... do they even know what they talking about??
 

RoganDawes

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“As you know, reductions in termination rates do not produce savings for Vodacom to pass on to customers - in fact, the opposite is true,” explained Vodacom spokesperson Richard Boorman.
how can the opposite be true?? surely u are paying less to MTN/CellC/8ta for each call to them .. so u are saving .... damn I hate the spoke people ... do they even know what they talking about??

Vodacom terminates more external calls on their own network than they send to other networks. As a result, Vodacom actually gets paid more money from MTN/Cell-C than they pay out, so MTR is actually a profit center for them. Reducing the MTR reduces that profit.
 
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TwoCents1000

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Maybe someone could explain why reducing MTR would lead to a drop in mobile rates in the first place?

Firstly, it only affects off-net calling.

Secondly, for the larger operators, paying and RECEIVING less MTR basically balances out. So where are the cost reductions that's supposed to be passed to the end user?

Thirdly, if you're a net receiver of MTR, your nett profit decreased. But somehow you should address this by decreasing rates as well? Try that one on the bean-counters and shareholders.

I'm not saying the current rates are right. But clearly reduction in MTR is not automatically going to result in reduced rates.

We have a big problem in South Africa with these so-called "industry experts" and "analysts". Many of them come with no relevant experience but are quick to make wild predictions. The latest unrealistic hype being created is that LLU will drive down ADSL costs.

They create all the hype and when it does not come to pass, trying to stay relevant, they're the first ones to state it was not reasonable to expect it in the first place, forgetting to admit the hype was their own creation!

People read their comments, believing the author actually knows what he is talking about and soon everyone quotes it as fact. Of course, when the reality hits, everyone cries foul.

In a similar vein, when a CEO of a small struggling VoIP provider becomes zealous about a topic and shouts it from the rooftops at every possible broadband seminar, one should carefully think why. For sure it's not about truly caring for the consumer as they always make out. Rather it's how much they care to stay in business.
 
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TwoCents1000

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“As you know, reductions in termination rates do not produce savings for Vodacom to pass on to customers - in fact, the opposite is true,” explained Vodacom spokesperson Richard Boorman.
how can the opposite be true?? surely u are paying less to MTN/CellC/8ta for each call to them .. so u are saving .... damn I hate the spoke people ... do they even know what they talking about??

To be brutally frank, do YOU know what you are talking about?

Have you ever thought that while they pay less MTR, they also RECEIVE less?
 
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RoganDawes

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Maybe someone could explain why reducing MTR would lead to a drop in mobile rates in the first place?

In a similar vein, when a CEO of a small struggling VoIP provider becomes zealous about a topic and shouts it from the rooftops at every possible broadband seminar, one should carefully think why. For sure it's not about truly caring for the consumer as they always make out. Rather it's how much they care to stay in business.

The key thing is that a reduced MTR reduces the barrier to entry for smaller players.

A high MTR means that the incumbents can make higher profits, regardless of the source of the call. And it means that the new entrants cannot cut prices as much as they may like, because of the fixed MTR component.

e.g.
MTR is R1.00 per minute. Incumbents charge R1.50 per minute.
New entrant wants to charge R1.10 per minute, but it means that their margin is then only R0.10. In order to make any meaningful profit, they have to charge something like R1.40/m, which is insufficient to overcome inertia, and get people to change. The incumbent is therefore not concerned, and does not change their prices to compete.

Contrast that with:
MTR is R0.50 per minute. Incumbents charge R1.50 per minute.
New entrant wants to charge R1.10 per minute, making a R0.60 margin, of which a decent amount is profit. This is sufficient to galvanise the market to change providers (esp now that number porting is available), and the incumbents are forced to react, bringing their own prices down.
 

The Trutherizer

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Yep... If the operators are not jumping to use the reduced cost to compete with their rivals then you can be sure price fixing is the order of the day.

Edit: And to those saying that reduced rates does not save the operators money then consider this - It stands to reason that the smaller operators who largely make use of 3'd party networks will benefit a lot. So ...
 
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redheadfan

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Telkom has not committed to passing on the latest wholesale termination rate cuts as they did previously,

Did I fall asleep? Because I don't remember Telkom dropping their rates at all!
 

Antonf

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Vodacom confirmed that they will not reduce their retail voice prices...
Has Vodacom EVER reduced any rate/price before MTN did? Then again, I am only 50 years old!
 

grok

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If they lose revenue because of lower interconnect rates, it because they've been ripping consumers off & deserve to be punished.

For the financial year ending 31 March 2009 Vodacom generated R 8 632 000 000 through interconnection in South Africa, up from R 7 945 000 000 a year ago. This is the company´s second largest revenue stream after ´airtime and access´, and is far higher than the R 5 973 000 000 generated through data services (SMS, MMS & broadband) or the R 5 190 000 000 from equipment sales.

MTN generated R 6 951 000 000 in interconnect revenue for the financial year which ended December 2008, up from R 6 346 000 000 for the previous twelve months. As is the case with Vodacom it is also the second largest revenue generator for the MTN behind airtime and subscription revenue.

MTN´s interconnect revenue is in fact more than its data and SMS revenue (R 3 596 000 000) and cellular telephone and accessories sales (R 3 122 000 000) put together.

http://www.ecntelecoms.com/index.php/service-providers-interconnect-costs/

Couldn't be arsed to find the 2010 figures but this illustrates the absurd amounts of money that was being exchanged for connection rates. They maintain it balances out, rather like a mutual ****fest where every partner partakes in giving and receiving, so basically everyone's happy. Except the consumer of course - interconnect charges used to make up 80% of total call charges. No-one disputes that interconnect rates should be paid, but the only purpose of setting it so high was to keep any newcomers out of their circle-jerk of shared pleasure.

Go cry us a river, scum.
 

AK65

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Is this net revenue? in other words, does it include the cost element (fees paid) or not? In any event, it's pretty obscene...just like your fest idea. A free for all inside, but a hefty payment to the bouncers at the door to get in.....
 
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