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Honest Telco

By TelcoAugust, 2007May 21st, 20244 min read

I’ve been slack. Very slack. After several months of sustained production, it’s fair to say I hit a patch of “writers’ block” when it came to material for the blog. There was enough going through my head, but the discipline of putting finger to keyboard seemed to fade. Then I read a fantastic quote from the great Jodi Picoult. She treats writing as a job, and writes every day no matter what, because “you can always edit something bad, but you can’t edit a blank page“. This really got me thinking. No, it didn’t get me writing every day, but it did get me thinking. In any event, I have finally dragged my lazy posterior off the lounge, and now I’m back.

There is a “watchdog” web site called Of course, we all know there is no such thing – all reporting is biased – so what this site tries to do is point out that bias. In particular, it focusses on the Middle East.

In the spirit of that web site, I thought it would be interesting to create (now there’s an oxymoron), where people could debunk the latest deception in the telco market. Instead of a dedicated web site, you will soon see a special section on Quack dedicated to this topic.

What has most recently caught my eye was Vodafone’s latest changes to their capped plans. I have already expressed views on capped plans and will not elaborate here. What I do want to explore is the nature of the changes Vodafone have made.

They are “bumping up the value of our $49 Prepay Maxi Cap from $230 to a massive $310 worth”. Now, any consumer would look at that and say “Wow! That’s a 34% increase!” because that’s exactly what it looks like.

They then point out that if you used your entire cap on one standard call, you would go from 382 minutes to 397 minutes. Now that’s an increase in buying power of just 4%. Why? Because they have offset the increase in cap value by increasing the underlying rates of the standard calls – from 30c to 39c (per 30 seconds), a 30% increase.

It’s actually worse than this. You see, they have also increased the connection fee from 25c to 29c. So if, like most people, you don’t make one long 300+ minute call per month, you will be hit by an increased flagfall for each call, and therefore probably experience less buying power than before!

Why the change? I think they have done this to realign their core rates to their competitors – 3 and Optus have similar underlying capped call rates. That way, they are better able to differentiate based on the total “cap value” (another oxymoron for you).

Important to note that they have left the SMS price the same – at 25c. This means that if you only used your capped plan mobile for texting, they would cost you just 4c each (down from 5.3c). Now that is a genuine saving. And indeed, there are plenty of these SIMs connected to GSM modems and used by businesses for sending bulk SMSs.

Do you have a great example of “creative pricing” in today’s telco market? I want to hear about it.

This was also posted at [Billing Bureau].

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