Now at first you may not consider this to essentially be a "music" based topic, but most of us out there are alligned with either one of these companies. As an active member of the musical community at large, I use me cellphone alot.. but feel im getting ripped. I found this article and reckon its a pretty interesting read.. especially when you take the 'youth' rumour mill out there into consideration. I mean who else out there has been waiting for Vodafone to bring out a direct competitive alternative to Telecoms $10 txt scheme? I was honestly and actually surprised to find that they werent planning any such thing at all... read on...
ARTICLE BEGINS HERE
Text wars
13 March 2004
The battle lines have been drawn. Telecom and Vodafone are going head to head in an attempt to win young customers, as Marta Steeman reports.
"I'm going to have no money for the rest of the month," Tess Nichol thinks aloud.
She has just sold her Vodafone cellphone to a friend and blown the money and her savings on a $249 Telecom mobile.
The 14-year-old Wellington Girls College pupil has dumped the epitome of "cool", Vodafone, for good old Telecom. What's the world coming to?
She has been won over by Telecom's all-you-can-text offer for $10 a month.
That's a good deal, she says, when texting is usually 20c a message and she spends $1 a day on it. Friends spend more.
"The only reason I'm going to Telecom is because of $10 text. Like, Vodafone's got cheaper phones and they are nicer looking."
Vodafone's share of the cellphone market has been climbing for six years on the strength of its appeal to youth, its technology and services and a wider range of phones.
Last year, it cracked the significant 50 per cent market share threshold leaving Telecom in its wake.
At the end of last year, Vodafone had 1.527 million customers, compared with Telecom's 1.302 million - 54 per cent to 46 per cent by customer numbers.
But Telecom is striking back at the heart of Vodafone's stronghold - the youth market - by tempting teenagers with the $10-a-month text deal. It applies only to phones on Telecom's 027 mobile network.
Given the phenomenal success of text-messaging, many young people are thinking hard about which cellphone company they choose because of the Telecom offer.
Jules van der Voorn, 14, at Onslow College, remains a loyal Vodafone fan.
"I know quite a lot of people who are doing it" - switching to Telecom - but he's not.
"I prefer Vodafone because I like the actual cellphones better." There was more variety and services with Vodafone and he liked Vodafone live!, an internet site for cellphones.
Steve Cole, a salesman at Vodafone dealership First Mobile in Wellington, said teenagers were asking "all the time" when Vodafone was going to match the $10 text deal.
"We've had kids come in and say 'I've heard a rumour you're going to do $8 texting'. We say, yeah, that's what I call it, a rumour".
Vodafone's general manager infotainment, Kieren Cooney, said Vodafone's customers were sending an average of nearly 3 million text messages a day.
At 20c a message, that's $600,000 a day and $219 million a year. Mr Cooney says the average cost would be less than 20c because of bulk deals and other offers Vodafone has.
Even at an average 10c a text message, Vodafone would be raking in $109 million a year from text messaging.
It is no surprise, then, that Vodafone is not prepared to match Telecom's offer. It has too much to lose.
Vodafone will not reveal how much revenue it gets from text messaging and what percentage it is of overall New Zealand revenue.
If $109 million is about right, text messaging is more than 10 per cent of Vodafone's revenues which totalled $841 million in the year to March 2003 and are forecast to break $1 billion in the March 2004 year.
"The thing with ring tones is...they kind of use it as a reflection of who I am...a song that is my favourite song or a voice of someone I admire." - Vodafone general manager infotainment Kieren Cooney.
Mr Cooney said texting was one just one of the mobile data revenues. Others were sending pictures (pxt) and short videos (video pxt at $1 a time from April 1), downloading ring tones (about $3 a time) and downloading games from Vodafone live!
Mr Cooney said pxt had increased 20 times in the past six months. Sending a pxt usually costs 50 cents a time, though it is free with both Vodafone and Telecom till the end of this month.
Downloading ring tones was "massive" in Europe and those trends were gathering strength in New Zealand too, Mr Cooney said.
"The thing with ring tones is...they kind of use it as a reflection of who I am...a song that is my favourite song or a voice of someone I admire."
The impact of Telecom's $10 text deal was negligible on Vodafone, he said.
"In terms of our customers, in terms of their spend, it's not actually having an impact on us. And having less of an impact than we would have imagined," Mr Cooney said.
Customer statistics back that. Vodafone's growth in new customers continues to streak ahead of Telecom.
Telecom began offering $10 texting last August. It added 32,000 customers in the three months to December, while Vodafone added 98,000 customers.
Vodafone's reason for not matching the $10 deal is that it does not follow competitors, it leads.
To comments that Vodafone was looking increasingly like a comfortable incumbent with big revenues, rather than an innovative challenger, Mr Cooney said: "It's another great reason we wouldn't want to copy a competitor's deal. It would be a real incumbent's behaviour."
Vodafone was looking at how it could add value to its services and offer "a better experience" so it did not look like it was more expensive.
Promotions it has offered to counter Telecom were "double top-ups", where a $20 top-up was worth $40 or two texts could be sent for the price of one, and happy hours.
Telecom group general manager mobile Kevin Kenrick said text messaging on its network had increased four-fold since it introduced the $10 offer. "It's had a dramatic impact."
The deal was aimed at persuading mobile customers on Telecom's older 025 network to trade up to its 027 network, because it was available only on 027 phones.
That had been successful. The number of 027 customers had increased to more than 500,000 from 370,000 in August. Telecom had also gained mobile customers from Vodafone (021) and TelstraClear (029), though Mr Kenrick did not have numbers.
Telecom's financial results show it is not losing potential revenue with $10 texting. Mobile data revenue is rising and the deal has increased texting.
Telecom notched up $21 million in mobile data revenue in the last six months of last year, compared with $12 million in the same period in 2002. Mobile data revenue includes texting, pxt, downloading ring tones and other services from Internet sites.
In addition, Telecom is reaping more interconnection revenue when a Vodafone customer texts a Telecom customer.
Mr Kenrick said Telecom had acquired a lot of new 027 customers who were not only spending $10 a month on texting, but paying for other services.
"What it's done is that it's changed people's perception of Vodafone. So they are now starting to say 'hey there's a company that I used to think was good value'."
How long will Telecom's $10 text deal last?
"Based on the results to date, we are in no hurry to change it," Mr Kenrick said. Telecom was looking at what it could add to the deal.
Vodafone finance director David Sullivan said customer numbers showed Telecom was failing to gain many Vodafone customers and Vodafone was continuing to enjoy strong customer growth.
The $10 deal had stimulated texting and Vodafone was enjoying a share of that too, he said.
ARTICLE ENDS HERE
What I think Vodafone faisl to take into consideration is how many people have both phones and that may be why they're not seeing a drop in customers. Because people arent trading their phones in, they're just buying another one and not using their old one.
I can see where they are coming from on an economic perspective, but if I had the cash to buy a new phone tomorrow I would go with Telecom and I fucking hate that evil company. If Vodafone are so fixed on remaining #1 in the youth market, then as far as I am concerned, they are going to have to wise up.
Just thought I would bring this to the attention of my fellow musos and music lovers who were also waiting for Vodafone to match the Telecom offer - you dont need to bother.
Delicious
Digg
Reddit
Facebook
Google
Technorati
I have just gone back to telecom with ...
I have just gone back to telecom with my tolls, and being in a small town, with old copper wire any ISP apart from telecom is a waste of time and money, I get ruffly 48kbps and with other ISPs it can get a low as 14kbps... you can play a game of free cell waitin for a page from NZM to load.
As for cell phone...... pft.. our coverage is so weak that we can get txts but as for voice just forget it, I recently got a new cell phone and had to drive 2 kg to get a strong enough signal to set it up, if I had a vodafone cell it would work here........ ah well.
I just hope that one day telcom starts to spend some of its huge profit to help stop the growing isolation of rual NZ, after all we country folk do want to eat our cake and have it too.
gutted...
gutted
You do realise that (shock horror!) ...
You do realise that (shock horror!) companies actually exist to make money, right? If Vodafone don't think they're losing money to Telecom, and they're confident in that position, then why should they match the offer?
true ... but i think vodaphone can ...
true ... but i think vodaphone can attribute a large amount of its success to the 'image' its built up here in nz.... the stats prove that they've captured the youth market.. and in no time at all really...
vodaphone has the image of being young, fresh thinking, innovative... way too many people consider vodaphone 'the little guys'... wow that freaks me out... they're one of the biggest companies in europe.. to me that kind of attitude just proves how brain washed lots of us our by the seductive vodaphone advertising.....
telecoms advertising on the other had is mostly crap.. especially in the youth market... and it shows.. their ads are too condesending.. and wanky.. the average joe cant identify... vodaphones low-fi approach has wide reaching appeal.... but dont for a second think that those ads cost less....
in conclusion... they're both evil - vodaphone does better market research
Actually, I heard from a friend who ...
Actually, I heard from a friend who works for Vodafone (NZ) that they can't actually afford to match the offer. A few months back they did those month-long weekends (off-peak all month) and that was in direct response to the deals that Telecom had started. After that they ran out of ideas.
Remember that Telecom provide a number of different services whereas Vodafone only do mobile. If Vodafone lose customers to Telecom, then they don't have a business, so it'd follow that if they don't do a cheap deal, then it's because they really can't justify the loss in revenue. I can respect that.
I prefer Vodafone because their network service is more reliable, the phones are nicer (and you can take them overseas), customer service is more helpful, and because they only do mobile - my perception is such that I'll choose a company that specialises in one field rather than one that juggles a whole lot.
While I'm here... We had problems switching our broadband connection from Paradise to Xtra (ha! we switched because telecom started offering cheaper deals). My flatmate rang up and explained that we'd called two weeks earlier to connect, paradise was going to cut us off that weekend and we still didn't have our xtra connection, and we wanted it Right Away Thankyou. The customer service guy said "well why don't you ring fucking paradise then?" and hung up. Nice.
oh yeah - thats were i was going - i ...
oh yeah - thats were i was going - i ment to say something about... vodaphone should watch out to keep its image untarnished.....if they're telling us to get stuffed they're not gonna match telecom .. they do what ever they want... that is gonna sink in... do vodaphone really care what people are saying... of course not,,.. they just wanta make monies - like you said joanna
...oh, and as for the "grasping ...
...oh, and as for the "grasping corporate multinational", although that's true, national branches live and die by the same rules that apply to smaller companies like Telecom. If Vodafone (NZ) went under (hypothetical situation, obviously), then it's doubtful that Vodafone Corporate would throw in a billion dollars to bail them out. Vodafone The Great Beast may live on, but then my mate would be out of a job and I'd have to use crappy Telecom mobiles and they wouldn't have any reason to offer cheap deals.
wow, tag-team soap box....
wow, tag-team soap box.
areap - dammit i cant spell vodafone... ...
areap - dammit i cant spell vodafone... nevermind..its monday,,, and i cant spell anyways
//vodaphone does better market research ...
//vodaphone does better market research
Or has a better advertising company.
usually the are housed under the same ...
usually the are housed under the same roof
this is scary
[ external link ]
//Vodafone (NZ) that they can't ...
//Vodafone (NZ) that they can't actually afford to match the offer.
Ah, correction - my mate reckoned it's not that they can't afford it - just they don't want to get into a price war.
Actually, the thing that I just realised is how weird it is that people are annoyed at Vodafone over this. After all, it's not like Vodafone have put their rates up or anything. Everyone knew what they were charging when they went out and bought their cool little GSM digital handsets...
BTW limegreen's my hero. Thanks for all the info.
BTW2 Xtra fucked up our internet connection *again* but this time the guy my flatmate spoke to was quite helpful.
hey Joanna, I'm well aware of what ...
hey Joanna, I'm well aware of what companies are there to do, but these big communications companies ARE rinsing us of our cash. What I wanted to do was bring to the attention of the txt mad community that Vodafone are not going to match Telecoms deal, so dont hold off switching networks any longer if txting is your bag.
We're hooked on communication, those companies will never go under unless the world gets blown up. And just to put those minds to rest out there who think Vodafone can't afford it, both companies have huge profit margins.
Communication monopolys are what we should worry about though, at least we have some semblance of competition here. Landlines excluded, fuckin telecom.
True, true. One thing I always ...
True, true.
One thing I always wondered - they talk about these ridiculous profit margins, and I'm probably just being thick when I ask - whereabouts does that money end up? Is that the amount that gets shelled out to shareholders, or is it reinvested in the company for expansion/development?
I assume the money is what they made over and above running costs in the previous year, and I'm sure a sizeable chunk gets shelled out in bonuses and dividends, but wouldn't a significant portion of it be fed back into the company for things like research and development? For a high-tech industry in an information-driven society that's not necessarily a bad thing for any of us.
from the voda ceo - "$90 million ...
from the voda ceo -
"$90 million net profit for the year to March 30"
"profit was not so spectacular when measured against the $1.2 billion Vodafone had invested in its New Zealand business."
not sure how much dividends they payed last year
//One thing I always wondered - they ...
//One thing I always wondered - they talk about these ridiculous profit margins, and I'm probably just being thick when I ask - whereabouts does that money end up? Is that the amount that gets shelled out to shareholders, or is it reinvested in the company for expansion/development?//
Shareholders returns (dividends) are typically less than 60% of profit (and often closer to 30%). The remaining money typically goes back into expansion/development/replacement etc. Telcos are big and expensive businesses (kind of like airlines), so they need to make good profits to get a reasonable return on their money. So vodafone claim they've invested 1.2 billion dollars in NZ. If they'd put that same money in the bank, they would earn perhaps 50 million dollars a year (4-5%). In reality, they probably don't own it, but will have some sort of debt (probably around 60%), so they'll want their profit to be better than the interest they're paying on the debt (in which case they probably want 70 million a year minimum). This suggests that if they are making 90 million a year, they're probably reasonably happy, but they'd probably be more comfortable with 100-110 million a year. In other words they're not creaming it. They're doing a bit better than breaking even.
Vodafone NZ is not a listed company but ...
Vodafone NZ is not a listed company but rather pay a return to Vodafone multinational, so it won't be clear how much of that profit leaves the country.
It is also a worth noting that Vodafone ...
It is also a worth noting that Vodafone pay publishers about 5c per 50c message, and Telecom about 20c.
Over the last few years it seems Vodafone have made it more and more difficult for publishers to make any income from text messaging. The percentage the publisher makes gets smaller as the demand grows. All the margin is going to Vodafone.
I suspect the Telco's want to be the only information publishers in the future.
hahaha, this thread is very misleading. ...
hahaha, this thread is very misleading. by the name of the title i thought it was going to be 14-16 year old girls arguing which company has the best cellphones and the coolest text deals.
good :) thread :)
aaaaaaaahhh....and so the bestion of ...
aaaaaaaahhh....and so the bestion of little boppers bitching over what mobile company is better...how entertaining
I've always liked telecom, I use it ...
I've always liked telecom, I use it for my high speed interenet connection, and have never had problems. I'm on vodafone for my cellphone at the moment but am going to switch to telecom when I can buy a new phone.
sounds like everyone's getting ...
sounds like everyone's getting screwed,
is it not possible in new zealand to just buy a new sim card,
or do they always make you fork over for a whole new phone?
//is it not possible in new zealand to ...
//is it not possible in new zealand to just buy a new sim card,
Telecom phones are CDMA - not GSM. No sim card.
!!...
!!
There are plans a foot for a cellphone ...
There are plans a foot for a cellphone which can do both CDMA and GSM, but at this time they are still two fundamentally different types of network. CDMA has faster data transfer rates, so Vodafone are introducing W-CDMA by the end of this year (which will of course mean a new phone, but they will still do GSM, so you keep your sim card).
[ external link ]
great info limegreen, //Vodafone ...
great info limegreen,
//Vodafone will sell multi-mode phones that can automatically switch between GSM, GPRS and W-CDMA. Users will be able to keep their existing number and prefix by simply swapping SIM cards from their existing phone to a new one.
i know who i'd go with, txt messaging interferes with schoolwork
//Telecom phones are CDMA - not GSM. No ...
//Telecom phones are CDMA - not GSM. No sim card.
And D-AMPS (025)
Vodafone... *sigh* stupid fools... they ...
Vodafone... *sigh* stupid fools... they actually still think they have the youth market?
i still have my vodafone... but as of tomorrow il be using telecom... im not trading in my vodafone.. but i certainly wont be using it... the change to telecom may be slow.. but if they can get loyal costumers like me to change... as sson as people realise that theyre being screwed around being on vodafone they'l leave... vodafone just doesnt realise cos we keep our phones...
im (as people who spend 20+ dollars a week have been called) a textaholic... i can easily spend $20 a week... in a year thats looking at over $1000 in credit... however...on telecom... new phone $300, plus a years worth of credit $120.... yeah its so worth staying with vodafone...
vodafone think they are a market leader? if they were they would have been intelligent enough to have done something along these lines this first..
ive got a vodafone and dont spend more ...
ive got a vodafone and dont spend more than $10 every 2 weeks on txting so its really no big worry for me. people should really wise up and realise that instead of spending money txting they should pick up a land line and use it for free.
yea being with vodafone is expensive ...
yea being with vodafone is expensive but I love my fone too much to change to a boring telecom fone (cos I ouldn;t be able to afford a flashy one). But hey with deals like the Nat bank tertiary plus account (getting $40 credit when u sign up with a mate etc) I managed to score $240 on my fone (from signing up like 4 others) and I put another $40 on my boy's fone so yea u find ways to make it work :)
Vodafone is more vibrantly fun. Telecom ...
Vodafone is more vibrantly fun. Telecom is just old but is always keeping up to par with competitors.
...by the way..we need this kind of ...
...by the way..we need this kind of competition between companies..because we benefit dont we.
//because we benefit dont we. we ...
//because we benefit dont we.
we pay the fourth highest rates for our mobiles in the world...
//Vodafone is more vibrantly fun
why?
//we pay the fourth highest rates for ...
//we pay the fourth highest rates for our mobiles in the world...
That's because we live in one of the most sparsely populated countries in the world. Stick up a cellphone tower in NZ, and someplaces have what 500 people, half of whom don't have a mobile, and a few passing cars. Stick up a tower in Europe pretty much anywhere and you have 20,000 people....
thats one reason... but much more ...
thats one reason...
but much more serious is the 30c mobile termination charge that telecom slaps on... many countries have had this rate fixed - most recently britain - consumers are expected to save $505 m a year
//but much more serious is the 30c ...
//but much more serious is the 30c mobile termination charge that telecom slaps on...
I agree that Telecom's interconnection terms are fairly dubious, but I was just checking out the vodafone site. Even when you're paying around $300/month on a contract, the cost of a call is still 35c/min (and this presumably applies to vodafone to vodafone calls as much as vodafone to telecom). I'm pretty sure the termination charge is per call not per minute, which suggests that it is an issue but not the issue. It's like airlines complaining about Wellington Airport putting it's landing fees up. Yes, it's an expense and a pain, but it's nothing like the interest on a 300 million dollar plane.
//Even when you're paying around ...
//Even when you're paying around $300/month on a contract, the cost of a call is still 35c/min
You're talking about the daytime 750 contract? You get 750 free minutes a month (any time of the day) on that contract before you have to start paying the minute rate.
//it is an issue but not the ...
//it is an issue but not the issue.
'the'issue'?? um - i wish things were that simple...
but this may shed some light:
'TUANZ claims New Zealand has one of the highest cellphone user charge regimes in the OECD and says the reason for this is the lack of competition.
"In New Zealand the dominant fixed-line operator is also the largest mobile operator so much of the transfer of funds arising from mobile termination actually takes place within the same company. Indeed it can be argued that termination charges allow all carriers to extract extra revenue from a captive customer base and each blame the other, so the incentives for them to place downward pressure on these charges is limited."'
//You're talking about the daytime 750 ...
//You're talking about the daytime 750 contract? You get 750 free minutes a month (any time of the day) on that contract before you have to start paying the minute rate.
Yeah but, 300/750= 40c/min...
//TUANZ claims
They would claim that they're overcharging; it's in their interest.
Somewhat tangentially, this termination cost is to do with land to mobile I think, which is expensive, but most other operators will allow you to do it cheaper (e.g., ihug 49c vs Telecom 72) and compares favourably to mobile-to-mobile rates
//They would claim that they're ...
//They would claim that they're overcharging; it's in their interest.
doesnt mean they're wrong tho... why are so many other countries regulationg termination charges?
you should read more about it - here is some clarification to start with:
"Telecom and Vodafone charge each other 30 cents a minute for "terminating" a call on each other's network. If a Vodafone mobile customer telephones a Telecom mobile customer, Vodafone pays the charge and vice versa if a Telecom mobile customer rings a Vodafone customer. The termination charge adds to the cost of a mobile phone call."
//are you sure this is the right way ...
//are you sure this is the right way round? last presentation i went to from both parties involved vodafone not answering telecoms questions on what technology they would have to use for 3G. the telecom dudes thought it was a great joke. from what i understood telecom is/was in a much better position for the switch to full 3G, though i think vodafone might have temporarily had it good with 2.5G or something.
Yeah I remember this. I think the vodafone live! stuff is 2.5G, but the current argument is that Telecom's 3G (their current 027 CDMA network) is more like 2.9G, and the W-CDMA standard that vodafone are going for would be like 3.2 G or whatever. In more sensible terms, 027 is currently about twice the speed of vodafone live!, but vodafone's new thing is going to be about twice 027. Telecom upgraded their network with the 027 quite recently as a big expense, so for them to match vodafone's new network, they'd be abandoning 027, even though they'd just built it, and essentially duplicating vodafone. Confused? I'm getting that way.
Going back... //we pay the fourth ...
Going back...
//we pay the fourth highest rates for our mobiles in the world...
//Vodafone is more vibrantly fun
//why?
First of all who purchased the mobile in the first place & second of all..Vodafone is fun..do I have to break it down for you..just look at the ads, the freshness of the company & the facilities/features that they bring..they're fun & their vodafone live is absolutely fun..(I've got an027 mobile at the momemt)..despise Telecom for stealing our landlines..(Check the history you'll be appauled.
No, it doesn't mean they're wrong, ...
No, it doesn't mean they're wrong, but they're likely to talk up their case and give it more weight. I'm also not against regulation on this either, and I'd certainly like to see cellphones become cheaper to use. What I have got sick of, I guess, was living with people from europe and the US who couldn't comprehend why cellphone calls are always going to be more expensive here than there, or who thought rent was cheap here but couldn't understand why places didn't have central heating.
I assume you lifted that quote from the herald. You'll notice further up the article it says that termination charges contribute to the higher cost of mobile calls. This means that the termination charge is only part of the issue. And on my original point, mobile networks are expensive to install, upgrade and maintain (whereas the copper wire to your house has probably been there for 20+ years), so at some point this is going to be factored in, whether it be through a termination charge or higher per minute rates. It would be interesting to know if termination charges were legislated to be lower, whether potential discounting of per minute rates would be delayed, leading to no net price discount in the long run.
//You'll notice further up the article ...
//You'll notice further up the article it says that termination charges contribute to the higher cost of mobile calls.
//This means that the termination charge is only part of the issue
yeap, totally agreed - but that 'contribution' is 30 cents per minute between networks.... wow !
pretty heavy stuff when you consider the current rates... and they're not doing anything to change that... .. but yeah i suppose seeing as they're creaming it , then they have monies to spend on improving their networks..
// but yeah i suppose seeing as ...
// but yeah i suppose seeing as they're creaming it , then they have monies to spend on improving their networks..
The transfer to 3G is going to cost them a mint. Especially for telecom, which may actually end up going with GSM type stuff in the end (in which case it really would be easy to switch between vodafone and telecom), as basically they're whole 027 network ends up being a waste of time. I'm still not that convinced that they're creaming it (as in they're profit doesn't look that good in terms of investment, although it's huge in dollar terms).
//The transfer to 3G is going to cost ...
//The transfer to 3G is going to cost them a mint. Especially for telecom, which may actually end up going with GSM type stuff in the end
are you sure this is the right way round? last presentation i went to from both parties involved vodafone not answering telecoms questions on what technology they would have to use for 3G. the telecom dudes thought it was a great joke. from what i understood telecom is/was in a much better position for the switch to full 3G, though i think vodafone might have temporarily had it good with 2.5G or something.
my phone still works.
Brings a whole new level to... "You ...
Brings a whole new level to...
"You hang up" - "No, you hang up" - "Nooo, you hang up"...
haha yeah - but not that kinda ...
haha yeah - but not that kinda terminating ... the geeky type... not the arnie way
hah- thats funny...shot dude...
hah- thats funny...shot dude
i would so get a telocom phone... but ...
i would so get a telocom phone... but vodafone phones looks waaaaaaaaay beter...