SaiyanZ
Executive Member
I'm interested in knowing how they got to the 56c per min prepaid average.
-
Join the MyBroadband community
South Africa’s biggest forum. Discuss, discover, and connect with thousands of members.
-
Question of the Day: Have you ever ordered a product online and received a fake knock-off?
![[)roi(]](/forum/data/avatars/m/8/8711.jpg?1563828683){kind=avatar}
Jannie could give you a long explanation, but in summary it's BS.
I'd only believe the figures if there was detailed verification by an independent 3rd party; far simpler to push ICASA to simplify call costs + reduce MTRs
Last edited:
SaiyanZ
Executive Member
[)roi(];12133867 said:
I'm guessing it's something like 5% of subscribers making extensive use of the specials paying 6c/min. The other 95% pay R1.20 per min or higher. Highly skewed but you end up with a 56c per min average which is not beneficial to the majority but looks good in news reports.
ToxicBunny
Oi! Leave me out of this...
Precisely that..
and also the pre-paid subscribers seem to get all these "specials", while the contract subscribers get knobbed at every turn.
Short version:
Except that Vodacom is tied to the very discourse and concept of predatory pricing by virtue of the positions they took on intermodal competition. I will double check but has Vodacom not been a party to competition complaints concerning Telkom?
The CTR asymmetry between voice and mobile and consequent subsidizing of operations and prevention of Telkom from predatory pricing is a massive part of the legacy of why Vodacom and MTN are in a position to perform predatory pricing to the detriment of the consumer and the industry.
CellC is the free rider here, but so what - if they can't capitalize on their free ride they will die a natural death?
"Effective Rates" can hardly be said to be a true reflection of anything. No hypothetical customer is likely to pay the effective rate and it uses really a dead average. What the average effective rate on a network could be useful to tell is whether a particular customer profile is subsidizing or being subsidized - take the individual customers effective rate and compare it to the operator average.
What an effective rate can also be used for - and is in this case - is to demonstrate that an operator is discouraging interconnecting between network operators.
Something else I would argue an effective rate could serve as a fairly good indicator of is what the network terminating revenue per minute is - so half your effective rate and you have the average revenue gained from terminating a call on the network and that could be you termination rate. It would actually be quite a nice call termination wholesale pricing model to go with - half of the networks effective call rate on the period during which the termination took place settled 30 days after invoice. So if Vodacom is claiming that their effective rate is 56c then they can terminate of 28c so the drop down to 20c represents only an 8c overshot on the regulator vs a 12c overshot that is currently in play.
Our competition laws in South Africa have various regulatory ideas rooted in ORDO liberalism, it is a simple reality that cuts all ways. If you don't want those laws vote for a political party that supports free markets - but Vodacom giving a how many million rand sponsorship to the ICT Indaba under Pule really discredits their right to complain too much
A debate about the expanding rather than contracting scope of competition law and the move by the ANC to remover competition law from the purview of the SCA as well as the inclusion of BBEE into the mix is a discussion that could well be had but I really don't think Vodacom would dare speak up against the ANC or make comment on the "predatory pricing" in the political sphere. The fact is that Vodacom management and shareholders know about the legal and economic climate of South Africa and have been able to plan accordingly. I find it wholly unsatisfactory that knowing of the risk of a deep asymmetry being implemented Vodacom hasn't developed ready to implement plans for MVNOs isn't in a position to say that the 20 something respondents who are small operators are able to enter into commercial roaming arrangements with Vodacom as essentially a wholesale provider. While I can't recall Vodacom ever explicitly supporting MTNs contention that Telkom should be split into wholesale and retail to maximize competition what is good for fixed line is good for mobile - and the entire GSM ecosystem is built around these sorts of options.
So yes I do think that a lot of the discourse about predatory pricing is generally daft and that if an enterprise using private capital puts that at risk by offering below cost goods and services to gain consumer hold - and frequently because it anticipates that the cost will come down - then it should be encouraged to do that, look at Afrihost. But I have very little sympathy for MTN, Vodacom and Telkom who have chosen to operate in a particular environment and to use that environment to their advantage, who spend considerable resources currying favor with government and in the case of MTN are under serious suspicion of serious fraud in some of their foreign operation. I also have sweet buggerall sympathy for CellC and strongly believe that they are guilty of the worst forms of rent seeking and playing at regulator arbitrage but if they put their capital up to fighting off bullying by larger operators (MTNs lawsuit is the height of trying to use litigation to strong arm) then so be it. All else being equal scrap large parts of statutory competition law and let the general principles of common law (the general refusal to exercise discretion in favour of a restraint of trade, voiding and refusing to give effect to contracts that are coercive and collusive to the extent of being contra boni mores) take shape, but in a regulated industry that operates on a licensing principle you are dealing with a public law and public interest paradigm.
Vodacom's massive on net promotions don't bother me in the least, especially where they act to provide poorer consumers with more value, what bothers me is Vodacom's refusal to cooperate and compete with other enterprises in the market such as to bring greater innovation and value.
Its not greedy as much as stupid that annoys me.
Except that Vodacom is tied to the very discourse and concept of predatory pricing by virtue of the positions they took on intermodal competition. I will double check but has Vodacom not been a party to competition complaints concerning Telkom?
The CTR asymmetry between voice and mobile and consequent subsidizing of operations and prevention of Telkom from predatory pricing is a massive part of the legacy of why Vodacom and MTN are in a position to perform predatory pricing to the detriment of the consumer and the industry.
CellC is the free rider here, but so what - if they can't capitalize on their free ride they will die a natural death?
But looking at some specific issues:
"Effective Rates" can hardly be said to be a true reflection of anything. No hypothetical customer is likely to pay the effective rate and it uses really a dead average. What the average effective rate on a network could be useful to tell is whether a particular customer profile is subsidizing or being subsidized - take the individual customers effective rate and compare it to the operator average.
What an effective rate can also be used for - and is in this case - is to demonstrate that an operator is discouraging interconnecting between network operators.
Something else I would argue an effective rate could serve as a fairly good indicator of is what the network terminating revenue per minute is - so half your effective rate and you have the average revenue gained from terminating a call on the network and that could be you termination rate. It would actually be quite a nice call termination wholesale pricing model to go with - half of the networks effective call rate on the period during which the termination took place settled 30 days after invoice. So if Vodacom is claiming that their effective rate is 56c then they can terminate of 28c so the drop down to 20c represents only an 8c overshot on the regulator vs a 12c overshot that is currently in play.
Our competition laws in South Africa have various regulatory ideas rooted in ORDO liberalism, it is a simple reality that cuts all ways. If you don't want those laws vote for a political party that supports free markets - but Vodacom giving a how many million rand sponsorship to the ICT Indaba under Pule really discredits their right to complain too much
A debate about the expanding rather than contracting scope of competition law and the move by the ANC to remover competition law from the purview of the SCA as well as the inclusion of BBEE into the mix is a discussion that could well be had but I really don't think Vodacom would dare speak up against the ANC or make comment on the "predatory pricing" in the political sphere. The fact is that Vodacom management and shareholders know about the legal and economic climate of South Africa and have been able to plan accordingly. I find it wholly unsatisfactory that knowing of the risk of a deep asymmetry being implemented Vodacom hasn't developed ready to implement plans for MVNOs isn't in a position to say that the 20 something respondents who are small operators are able to enter into commercial roaming arrangements with Vodacom as essentially a wholesale provider. While I can't recall Vodacom ever explicitly supporting MTNs contention that Telkom should be split into wholesale and retail to maximize competition what is good for fixed line is good for mobile - and the entire GSM ecosystem is built around these sorts of options.So yes I do think that a lot of the discourse about predatory pricing is generally daft and that if an enterprise using private capital puts that at risk by offering below cost goods and services to gain consumer hold - and frequently because it anticipates that the cost will come down - then it should be encouraged to do that, look at Afrihost. But I have very little sympathy for MTN, Vodacom and Telkom who have chosen to operate in a particular environment and to use that environment to their advantage, who spend considerable resources currying favor with government and in the case of MTN are under serious suspicion of serious fraud in some of their foreign operation. I also have sweet buggerall sympathy for CellC and strongly believe that they are guilty of the worst forms of rent seeking and playing at regulator arbitrage but if they put their capital up to fighting off bullying by larger operators (MTNs lawsuit is the height of trying to use litigation to strong arm) then so be it. All else being equal scrap large parts of statutory competition law and let the general principles of common law (the general refusal to exercise discretion in favour of a restraint of trade, voiding and refusing to give effect to contracts that are coercive and collusive to the extent of being contra boni mores) take shape, but in a regulated industry that operates on a licensing principle you are dealing with a public law and public interest paradigm.
Vodacom's massive on net promotions don't bother me in the least, especially where they act to provide poorer consumers with more value, what bothers me is Vodacom's refusal to cooperate and compete with other enterprises in the market such as to bring greater innovation and value.
Its not greedy as much as stupid that annoys me.
Sodan
Expert Member
An extremely important point, but it gets ONLY 1 LINE in the entire article, and no reference in the title. Disappointing journalism.
Assumed of course that we believe them about the 56c. I don't!
How are we for example; to know that they do not include their own business calls in these numbers; staff which either benefit from a lower cost or alternatively are costed out at a lower internal rate, skewing the figures in favor of VC.
Without full disclosure to an independent 3rd party auditor, all we have is their promises
I'm fairly confident we've only scratched the surface of the anti competitive / corruptive crap of our iceberg duopoly. Just imagine for a moment what the reality could look like.
... and in all of this lets not forget to adequately thank the ANC this election term, as we are now successfully reaping the harvest of one too many successful f..kups.
Either way, as the 3rd cellular operator CellC entered our market already disadvantage by an overly extended time; yet most of their dismal failures could probably be attributed to both: a completely unhealthy environment for competition (anally birthed from a 100% successful retardation of the DOC & ICASA), not excluding some blame for Cell C's own spineless / clueless management teams.
That said I still don't think that we should simply write it off as part of the ANCs learning. Our market place is rife with far too many examples of similar abuse, hence it's important that the duopoly be made to account to the public for their flagrant abuse of the system.p
Last edited:
chopsky
Expert Member
Until another small competitor enters soon after and they're forced to lower their prices below cost yet again. It is unsustainable in the long term.
JerryMungo
Honorary Master
- Joined
- Jul 18, 2008
- Messages
- 37,567
- Reaction score
- 6,322
Still applies though, its not quick and easy to switch providers at a whim so prices would have to be kept low for a while, maybe even years for those on contract to move over. And of course the bankrupt provider will still have its network at the end of the day that could be bought up by a new entrant (or whoever) giving them instant access to the market and thus forcing the incumbent to continue its predatory pricing strategy.
except that the cost to persist with predatory pricing becomes unfeasible
remember if you don't have ownership restrictions you have lots of deep pockets and an incentive to give a global competitor hell so that they are unable to invest in markets where you are happy.
remember if you don't have ownership restrictions you have lots of deep pockets and an incentive to give a global competitor hell so that they are unable to invest in markets where you are happy.
marine1
Honorary Master
I would like to stick this bull**** EFFECTIVE privicing up Scameels rear end.
True about deep pockets, but of course if you're dominating the market you're taking a loss on 90% of what is sold and your competitor is taking a loss on 10% of what is sold, in that case you need deep pockets, so it is all relative. I just don't view predatory pricing as a big issue, especially in the long run. It's usually used as an excuse for greater government regulation, and ironically the conditions needed for predatory pricing to occur are usually caused by government in the first place.
well my whole point is that "predatory pricing" really is only possible because of government coercion. Without government coercion it is simply a loss leading marketing strategy that in the long run has no total predatory consequences. For this reason I don't like the defining of predatory pricing on the basis of market share or anything of that nature as there is correlation but not causation. However in the case of a regulated and historically regulated industry competition issues naturally arise and in the same way as administrative law mangles about in the allocation of licenses it features in competition issues.
The best end result in my view is to have CTRs determined by contract (which might well refer to some or another index or whatever) but in the current framework the CTR prices are being fixed by a regulator and I'd rather they be fixed to support growing competition than fixed to support what the dominant operators want.
The best end result in my view is to have CTRs determined by contract (which might well refer to some or another index or whatever) but in the current framework the CTR prices are being fixed by a regulator and I'd rather they be fixed to support growing competition than fixed to support what the dominant operators want.
jannievanzyl
Telecoms expert
It's really not complicated.
You take the total revenue generated and devide it by the total number of minutes. It gives the average cost per minute.
As with any metric, understand it and use it in context.
Like ICASA is ....It's really not complicated.
You take the total revenue generated and devide it by the total number of minutes. It gives the average cost per minute.
As with any metric, understand it and use it in context.
jannievanzyl
Telecoms expert
You never know how they intepret stuff.
All I'm saying is that the effective rate is just that.
ToucheYou never know how they intepret stuff.
All I'm saying is that the effective rate is just that.
All I repeatedly say is that when the CEO says "our call rates are low" and then proceeds to talk about network average effective rates he is stretching the koolaid more than a little and when effective rates are significantly lower than termination rates the case for asymmetric termination appears - assuming a reason for regulatory intervention