Some commentators noting the popularity of wireless devices err in confusing the use of handheld devices with actual mobility.
I made this point briefly in a submission yesterday to the ACCC consideration of the Telstra SSU. I was using download data to demonstrate how little the download is on wireless data devices compared to fixed.
Today I noted a week+ old story that reported the lessons learnt by Deutsche Telecom as recounted by their CTO.
It's more a wireless experience than a true mobile experience. In reality they use mobile handsets for fixed usage.
In addition, 80 percent of people's data traffic comes from just three cell phone towers--one near home, one near work, and one someplace in between.
Just to drive the point home about wireless;
Deutsche Telekom also considered what it would take to completely satisfy the European Union's goal of bringing broadband at 100 megabits per second--enough for Internet, phone, and TV data--to customers in a large urban area without using fixed lines. The upshot, using Berlin as a test: it's not practical.
A company would need communication stations every 0.009 square kilometers, he said. My quick math, based on Wikipedia's judgment that Berlin covers about 892 square kilometers, is that more than 99,000 towers would be needed.
Novae Meridianae Demetae Dexter delenda est
Showing posts with label mobiles. Show all posts
Showing posts with label mobiles. Show all posts
Thursday, October 06, 2011
Monday, May 16, 2011
Mobile coverage and information in markets
In his Twisted Wire podcast last week Phil Dobbie raises the question of how consumers should be informed about the coverage available on mobile networks. On positing the idea of a consolidated detailed map of coverage Telstra’s Max Jennings said;
I don’t think so. It’s a very competitive industry in this country, and it’s in each of the operators interest to (a) publish correct data about coverage and performance and (b) to maintain that performance level over time. Now the coverage maps won’t indicate performance per se, they’ll indicate where the signal is available; but the capacity side of the equation is also extremely important.
Your customers will very quickly tell you if you are not meeting the expectations that were delivered to the customer at the time of purchase and they have the opportunity to walk to one or two or however many operators that exist selling mobile services.
I don’t think it needs to be regulated. I think the competitive forces within the industry will sort that issue out.
The discussion reveals a good example of the naive faith in competition and markets promoted by telcos. As I've outlined elsewhere the discussion ignores what is known in economics (after Akerlof's paper as the "market for lemons". More recently research shows that the problem of the efficiency deviation of lemons markets is increased by increasing competition.
The position described by Max of a customer being able to change network after the fact of finding poor coverage reflects the failure to understand that the consumer can't do that because of a lack of information about the alternative.
The suggestion ignores the high switching costs for customers as well. There is not only the problem of time commitment now but the very fragmented spectrum model that really you want to keep your phone on the network you bought it for.
But the buzzword in customer experience these days is "reducing customer effort" with its own score. The attitude of let customers buy and then experience the coverage doesn't reduce customer effort.
It is a bit disappointing because when Max and I worked together in the Corporate Customer Division of Telstra the research then conducted on customers by PA Consulting revealed that reducing the effort they had to put into managing telecommunications was a big driver of assessment of the quality of customer service. That in turn fed part of the assessment of the attractiveness of our long term agreements (called Strategic Partnership Agreements).
Max and Phil went on to share a joke about how Vodafone was already witnessing a big churn driven by poor coverage experience. Vodafone has now developed a coverage checker that conveniently uses Google Maps. It has however already received negative comments as the coverage shown isn't what is reported.
The site carries the usual disclaimer about such predictive models. Over time the site could get better by being adjusted by the actual experience at actual places. (one of which can also one how high off the ground you are - ever noticed poorer coverage on the higher floors of a building). I sympathise with the carriers and the difficulty of actually defining a coverage expectation, given all the factors that can affect it. But I feel for their customers far more.
But let's face it, Vodafone has felt driven to this situation because of a small disaster with coverage. Telstra and Optus have no need to respond.
Real world markets don't work like they do in economics or MBA courses - firms and policy makers need to recognise that.
Novae Meridianae Demetae Dexter delenda est
I don’t think so. It’s a very competitive industry in this country, and it’s in each of the operators interest to (a) publish correct data about coverage and performance and (b) to maintain that performance level over time. Now the coverage maps won’t indicate performance per se, they’ll indicate where the signal is available; but the capacity side of the equation is also extremely important.
Your customers will very quickly tell you if you are not meeting the expectations that were delivered to the customer at the time of purchase and they have the opportunity to walk to one or two or however many operators that exist selling mobile services.
I don’t think it needs to be regulated. I think the competitive forces within the industry will sort that issue out.
The discussion reveals a good example of the naive faith in competition and markets promoted by telcos. As I've outlined elsewhere the discussion ignores what is known in economics (after Akerlof's paper as the "market for lemons". More recently research shows that the problem of the efficiency deviation of lemons markets is increased by increasing competition.
The position described by Max of a customer being able to change network after the fact of finding poor coverage reflects the failure to understand that the consumer can't do that because of a lack of information about the alternative.
The suggestion ignores the high switching costs for customers as well. There is not only the problem of time commitment now but the very fragmented spectrum model that really you want to keep your phone on the network you bought it for.
But the buzzword in customer experience these days is "reducing customer effort" with its own score. The attitude of let customers buy and then experience the coverage doesn't reduce customer effort.
It is a bit disappointing because when Max and I worked together in the Corporate Customer Division of Telstra the research then conducted on customers by PA Consulting revealed that reducing the effort they had to put into managing telecommunications was a big driver of assessment of the quality of customer service. That in turn fed part of the assessment of the attractiveness of our long term agreements (called Strategic Partnership Agreements).
Max and Phil went on to share a joke about how Vodafone was already witnessing a big churn driven by poor coverage experience. Vodafone has now developed a coverage checker that conveniently uses Google Maps. It has however already received negative comments as the coverage shown isn't what is reported.
The site carries the usual disclaimer about such predictive models. Over time the site could get better by being adjusted by the actual experience at actual places. (one of which can also one how high off the ground you are - ever noticed poorer coverage on the higher floors of a building). I sympathise with the carriers and the difficulty of actually defining a coverage expectation, given all the factors that can affect it. But I feel for their customers far more.
But let's face it, Vodafone has felt driven to this situation because of a small disaster with coverage. Telstra and Optus have no need to respond.
Real world markets don't work like they do in economics or MBA courses - firms and policy makers need to recognise that.
Novae Meridianae Demetae Dexter delenda est
Friday, March 18, 2011
Mobiles across the ditch
I'm going to quote at length from TUANZ's e-mail TUANZ This Week because I can't seem to find it as web content.
It’s been a busy week with two of the industry’s biggest challenges being tackled within hours of each other.
First up we had a two-day conference on that most enduring of topics – mobile termination rates (now called Mobile Termination Access Services because why have a three-letter acronym when you can have a four).
A quick search of Computerworld’s archive talks of MTR way back in 2005 but by then it was a already festering sore.
This week should be the last nail in its coffin. The Commerce Commission has been given the remit to regulate, it has recommended that it should set the price, the Minister has agreed and the parties are now all jockeying for position.
The two-day conference was really the last chance for everyone to make clear their views on the matter at hand. The Commission’s draft report recommends moving to pure bill and keep (BAK) for TXT messages (that is, each company sets the price and bills its customers accordingly and keeps all the money rather than sharing with the other network if the TXT goes to another network), and a low level of roughly 4.5c/minute for voice calls (down from what is currently on a like for like basis about 18cpm) defined as being “cost based” (more on that later).
There is to be no glide path down to these rates (even though overseas that is typically the way it’s done) and there’s no difference to be had between calls from a mobile phone to a mobile number and a fixed-line to a mobile number. This is a good thing because it leads to nonsense with telcos routing calls oddly for best pricing.
The conference really came to life, however, around one extra element – on-net pricing.
In its submission, 2degrees called for a ban on on-net pricing for the two big guys Telecom and Vodafone. Its rationale, and one I think merits extra investigation, is that because of the huge difference in pricing between on-net and off-net pricing combined with the market share each telco has in various regional areas (2degrees calls them regional monopolies) then any new entrant has a double hurdle to clear. Not only does it have to offer sharper pricing, it also has to compete with a bigger problem in that individual customers can’t move to a new network because all their on-net friends will find they’re off-net and stop calling them.
The Commission put up a draft clause that could require the telcos to charge exactly the same for off-net calling as they charge for on-net. They’d be free to set that rate, but they wouldn’t be allowed to discriminate between calling types.
This caused immediate uproar from Telecom and Vodafone who went in lawyers blazing and if this clause is included in the final recommendation, I’d say we’re sure to see one or the other telco call for a judicial review.
Legal shenanigans aside, it’s an intriguing point. If I want to move to 2degrees (and I have) will my on-net buddies stop calling me from Vodafone (I use Vodafone because I’m based in Auckland where, according to various figures, Auckland’s share of voice traffic is over 70% and TXT is over 90%). If they do stop calling, there’s nothing 2degrees could offer me at that point to entice me over – those incoming calls (amusingly called “call externalities” by the industry) are too important for me to miss.
In our submission, TUANZ called for a different approach to TXT because of concerns around spam (we’d like to see some small fee retained – I’d originally thought a hybrid BAK system would work but Graham Walmsley from CallPlus said that would prove to be costly and complex so why not go for a low price point, say a third of a cent, and leave it at that. I quite like that and if Graham’s happy then that might work well).
On call pricing I’m happy with the drop and not too concerned about a glide path (Vodafone suggested that the glide path should be in there over two or three years if only so the Commission could look to see whether or not consumers are seeing pass through benefits from it. I like that, but I’m absolutely sure the telcos will pass on the savings to us because if they don’t we’ll vote with our wallets and I’ll put them on the wall of shame. So no to a glide path).
As for on-net price differentials, there’s definitely something there but having a morning’s chat about it at the end of the MTAS process doesn’t feel right to me. I’d rather we had some robust metrics, some clear understanding of how it would work in practice (and how long we would keep it up for) and its impact on the customer. Would we see Vodafone immediately withdraw BestMate and Family (and TalkZoneZero, it’s business calling group plan) or would it open them up to non-Vodafone numbers as 2degrees suggests.
Telecom is doubly unhappy because it sees its any-net regime as giving it a competitive advantage in XT and certainly having to not think about on-net and off-net is a big win for their customers. Telecom also suggested that such a decision would be open to other companies playing silly buggers with pricing – while they didn’t call 2degrees out on it, they’re clearly referring to 2degrees’ TXT ME race which has seen customers programming smartphones to spam the Telecom network and is costing Telecom tens of thousands of dollars a month.
Interestingly, 2degrees’ submission says that while on-net pricing will be banned for Telecom and Vodafone, it wouldn’t for … 2degrees! In Europe apparently it’s not uncommon to find regulators who will ban the incumbents from doing something but not the new entrant. So perhaps we’ll see 2degrees doing Best Mate while Vodafone can not.
If I was a betting man I’d say we’ll see about 4.5cpm for voice (the median figure or 25th percentile but definitely not 75th percentile for those that are following closely), a commercial deal between carriers for TXT backed up by a watching brief from the Commerce Commission (probably about one third of a cent per TXT) and a clause banning the differential between on-net and off-net for a three year period with annual reviews. Telecom and Vodafone will put in for a judicial review and that will go against them but make them look like lumbering giants behaving badly.
It is always hard to know where things will land in NZ. But I'm an absolute believer that on-net pricing is destructive of the formation of effective markets - if only because it makes it so hard to price compare. Also there is no justification for differential F2M and M2M rates - a matter I think the ACCC is considering. And the price should be "cost based" - but the more I think about it the more the original Gans and King proposition of marginal cost pricing not average incremental cost makes sense. That brings the number lower than 1c/min - not even 4.5c/min (though that 4.5c is in New Zealand zlotys).
Novae Meridianae Demetae Dexter delenda est
It’s been a busy week with two of the industry’s biggest challenges being tackled within hours of each other.
First up we had a two-day conference on that most enduring of topics – mobile termination rates (now called Mobile Termination Access Services because why have a three-letter acronym when you can have a four).
A quick search of Computerworld’s archive talks of MTR way back in 2005 but by then it was a already festering sore.
This week should be the last nail in its coffin. The Commerce Commission has been given the remit to regulate, it has recommended that it should set the price, the Minister has agreed and the parties are now all jockeying for position.
The two-day conference was really the last chance for everyone to make clear their views on the matter at hand. The Commission’s draft report recommends moving to pure bill and keep (BAK) for TXT messages (that is, each company sets the price and bills its customers accordingly and keeps all the money rather than sharing with the other network if the TXT goes to another network), and a low level of roughly 4.5c/minute for voice calls (down from what is currently on a like for like basis about 18cpm) defined as being “cost based” (more on that later).
There is to be no glide path down to these rates (even though overseas that is typically the way it’s done) and there’s no difference to be had between calls from a mobile phone to a mobile number and a fixed-line to a mobile number. This is a good thing because it leads to nonsense with telcos routing calls oddly for best pricing.
The conference really came to life, however, around one extra element – on-net pricing.
In its submission, 2degrees called for a ban on on-net pricing for the two big guys Telecom and Vodafone. Its rationale, and one I think merits extra investigation, is that because of the huge difference in pricing between on-net and off-net pricing combined with the market share each telco has in various regional areas (2degrees calls them regional monopolies) then any new entrant has a double hurdle to clear. Not only does it have to offer sharper pricing, it also has to compete with a bigger problem in that individual customers can’t move to a new network because all their on-net friends will find they’re off-net and stop calling them.
The Commission put up a draft clause that could require the telcos to charge exactly the same for off-net calling as they charge for on-net. They’d be free to set that rate, but they wouldn’t be allowed to discriminate between calling types.
This caused immediate uproar from Telecom and Vodafone who went in lawyers blazing and if this clause is included in the final recommendation, I’d say we’re sure to see one or the other telco call for a judicial review.
Legal shenanigans aside, it’s an intriguing point. If I want to move to 2degrees (and I have) will my on-net buddies stop calling me from Vodafone (I use Vodafone because I’m based in Auckland where, according to various figures, Auckland’s share of voice traffic is over 70% and TXT is over 90%). If they do stop calling, there’s nothing 2degrees could offer me at that point to entice me over – those incoming calls (amusingly called “call externalities” by the industry) are too important for me to miss.
In our submission, TUANZ called for a different approach to TXT because of concerns around spam (we’d like to see some small fee retained – I’d originally thought a hybrid BAK system would work but Graham Walmsley from CallPlus said that would prove to be costly and complex so why not go for a low price point, say a third of a cent, and leave it at that. I quite like that and if Graham’s happy then that might work well).
On call pricing I’m happy with the drop and not too concerned about a glide path (Vodafone suggested that the glide path should be in there over two or three years if only so the Commission could look to see whether or not consumers are seeing pass through benefits from it. I like that, but I’m absolutely sure the telcos will pass on the savings to us because if they don’t we’ll vote with our wallets and I’ll put them on the wall of shame. So no to a glide path).
As for on-net price differentials, there’s definitely something there but having a morning’s chat about it at the end of the MTAS process doesn’t feel right to me. I’d rather we had some robust metrics, some clear understanding of how it would work in practice (and how long we would keep it up for) and its impact on the customer. Would we see Vodafone immediately withdraw BestMate and Family (and TalkZoneZero, it’s business calling group plan) or would it open them up to non-Vodafone numbers as 2degrees suggests.
Telecom is doubly unhappy because it sees its any-net regime as giving it a competitive advantage in XT and certainly having to not think about on-net and off-net is a big win for their customers. Telecom also suggested that such a decision would be open to other companies playing silly buggers with pricing – while they didn’t call 2degrees out on it, they’re clearly referring to 2degrees’ TXT ME race which has seen customers programming smartphones to spam the Telecom network and is costing Telecom tens of thousands of dollars a month.
Interestingly, 2degrees’ submission says that while on-net pricing will be banned for Telecom and Vodafone, it wouldn’t for … 2degrees! In Europe apparently it’s not uncommon to find regulators who will ban the incumbents from doing something but not the new entrant. So perhaps we’ll see 2degrees doing Best Mate while Vodafone can not.
If I was a betting man I’d say we’ll see about 4.5cpm for voice (the median figure or 25th percentile but definitely not 75th percentile for those that are following closely), a commercial deal between carriers for TXT backed up by a watching brief from the Commerce Commission (probably about one third of a cent per TXT) and a clause banning the differential between on-net and off-net for a three year period with annual reviews. Telecom and Vodafone will put in for a judicial review and that will go against them but make them look like lumbering giants behaving badly.
It is always hard to know where things will land in NZ. But I'm an absolute believer that on-net pricing is destructive of the formation of effective markets - if only because it makes it so hard to price compare. Also there is no justification for differential F2M and M2M rates - a matter I think the ACCC is considering. And the price should be "cost based" - but the more I think about it the more the original Gans and King proposition of marginal cost pricing not average incremental cost makes sense. That brings the number lower than 1c/min - not even 4.5c/min (though that 4.5c is in New Zealand zlotys).
Novae Meridianae Demetae Dexter delenda est
Wednesday, May 17, 2006
Robespierre
My post below got left hanging with an obvious conclusion ... what happens when politicians "follow the mob". History has a very interesting lesson there. When modern democracy was a new creation during the French Revolution there was a period of time when the Jacobins "came to power" in the General Assembly. The leader of this group was one Robespierre, and during this time was when the terror occurred in the French Revolution.
One interpretation that can be placed on the terror was that Robespierre was a believer in "direct democracy", that is, doing what the people want. In reality he had no institutional structure to accurately ascertain the wishes of the people, and certainly no structures to ensure the people wre informed and making a full set of choices.
The consequence was mob rule where the Government responded to the calls of the Paris mob. And thus the guillotine commenced its work. This was not because the Government had no control and was appeasing - it was at their time the Government's belief that this is what constituted democracy.
We are seeing our own modern version of this in our justice system. New South Wales Chief Justice Jim Spigelman has recently seen fit to criticise the populism with which politicians of both sides have taken to criticising the courts. He said "Long experience has established that such tasks are best done by independent, impartial and experienced persons, who are not subject to the transient rages and enthusiasms that attend the so frequently ill-informed, or partly informed, public debate on such matters."
This general critique is closely related to our understanding of the meaning of justice and the purpose of the justice system. The modern idea is that justice is about the victims and "closure" - for which we can read retribution. The older idea is that justice was about deterrence and remediation - and that the social response should be to forgive. As a society we are moving from the New Testament values of forgiveness to the Old Testament values of "an eye for an eye".
See also.
One interpretation that can be placed on the terror was that Robespierre was a believer in "direct democracy", that is, doing what the people want. In reality he had no institutional structure to accurately ascertain the wishes of the people, and certainly no structures to ensure the people wre informed and making a full set of choices.
The consequence was mob rule where the Government responded to the calls of the Paris mob. And thus the guillotine commenced its work. This was not because the Government had no control and was appeasing - it was at their time the Government's belief that this is what constituted democracy.
We are seeing our own modern version of this in our justice system. New South Wales Chief Justice Jim Spigelman has recently seen fit to criticise the populism with which politicians of both sides have taken to criticising the courts. He said "Long experience has established that such tasks are best done by independent, impartial and experienced persons, who are not subject to the transient rages and enthusiasms that attend the so frequently ill-informed, or partly informed, public debate on such matters."
This general critique is closely related to our understanding of the meaning of justice and the purpose of the justice system. The modern idea is that justice is about the victims and "closure" - for which we can read retribution. The older idea is that justice was about deterrence and remediation - and that the social response should be to forgive. As a society we are moving from the New Testament values of forgiveness to the Old Testament values of "an eye for an eye".
See also.
Wednesday, January 18, 2006
Somalia calling
A colleague brought my attention to this item in The Economist.It is a story that claims that calls from mobiles in Somalia are cheaper and clearer than elsewhere in Africa, and attributes this to an absence of regulation.
This story may give comfort to anti-regulationists everywhere, were it not for the fact that at least part of the success seems to be due to the complete lack of the first tenet of anti-regulationists - that is property rights. If the telcos are not paying to put up towers they are not paying land rents.
The article also mentions that Somalia has had no government since 1991 and was "cut off for a while" before the mobile companies arrived. The CIA World Fact Book describes it as "the public telecommunications system was almost completely destroyed or dismantled by the civil war factions". So in those countries where regulation exists to deal with the market power of formerly government owned monopolies now have a different model to follow. Don't regulate - just have a civil war to destroy the incumbent's infrastructure.
You might think me strange - but I'll stick with the regulatory path.
This story may give comfort to anti-regulationists everywhere, were it not for the fact that at least part of the success seems to be due to the complete lack of the first tenet of anti-regulationists - that is property rights. If the telcos are not paying to put up towers they are not paying land rents.
The article also mentions that Somalia has had no government since 1991 and was "cut off for a while" before the mobile companies arrived. The CIA World Fact Book describes it as "the public telecommunications system was almost completely destroyed or dismantled by the civil war factions". So in those countries where regulation exists to deal with the market power of formerly government owned monopolies now have a different model to follow. Don't regulate - just have a civil war to destroy the incumbent's infrastructure.
You might think me strange - but I'll stick with the regulatory path.
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