Wednesday, February 11. 2009Trying To Make Sense Out Of NonsenseJohn Linton It's that time of the review cycle again where we look at our mobile telephone offerings and, yet again, ponder the stupidities and mysteries of the mobile carrier's love of "capped" plans which are not "capped" and the, presumably, equally impossible to understand attraction the mobile telephone buyers have to "capped" plans. I've probably referenced my total bafflement with the buyer/seller symbiosis that has seen this 'cancer' overtake all rationality in the provision of mobile telephone services to the point where, it appears to me, that the buyers agree that they are truly stupid and that they want to be conned by the "Get $1,000 Worth Of Calls For 1 Cent" 'headlines' that are, apparently, the essential main wording of every mobile plan ad. I have always looked at technology pricing in the most straight forward of ways. You get a certain amount of service for a stated rate that the buyer can easily understand and compare. Obviously that's not the way mobile phone call plansĀ are offered for sale. So we will, yet again, try and offer mobile plans that will "appeal" to what the mobile carriers have deemed, by long usage, that the buying public want to see: Large Amount Of Calls At Huge Discounts - If the headline ad is to be believed. A long time reader of this blog who has always offered opinions that gave every indication of a reasoning and intelligent mind recently pointed out the fantastic value of a new TPG (no contract) plan that offered $300.00 for $20.00. Fair enough - here's a company apparently offering the buyer a 93% discountĀ - what a fantastic deal - in anyone's language. But does anyone with any sort of intelligence really believe that that in any competitive market anywhere on the planet there is so much profit in any product or service that it can be sold for 5% of its retail price? Apparently there are. Maybe not - maybe everyone knows that they really aren't getting a 95% discount and that the carriers are misrepresenting the truth but it's OK because they all do the same and it's just a 'cue' to work out how many minutes of calls you actually get for the monthly "capped" price. There is little doubt that the TPG plan (using the Optus mobile network) is the best value available compared to all other $20.00 "capped" plans from all other carriers or their re-sellers. A quick, and by no means comprehensive, 'analysis' of other $20 offerings seems to show that TPG offer around twice as many calls as all other providers of mobile services. Looking at the current market the 'average' "value" is around $150.00 of calls for $20.00. Of course it isn't that simple as the call rates and flag falls and data costs and...... all vary but this 'war' is fought on the two head lines of: "$10 million worth of calls for $00.001 cent a month' 'logic'. Doubtless the "Soul" part of the current TPG had built up some large volumes selling Optus mobile services and therefore buy infinitely better than Exetel's tiny numbers alows us to buy the same minutes for. However, even in my wildest imaginings and humblest view of Exetel's less than stellar negotiating skills, I can't believe that TPG buys at less than 50% of every other large mobile retail seller/reseller most of which are far larger than Soul let alone at 80% less than Exetel, tiny though it may be, buys mobile minutes for. Yet that is what TPGs retail pricing suggests - so it must be true. Exetel will offer 'new' mobile plans by COB this coming Friday and will incorporate new "capped" plans that are more than comparable to those offered by the main mobile resellers and carriers although I don't understand any more today than at any time in the past why I'm allowing Exetel's straightforward and, well - honest, pricing policies to be 'sullied' by conforming to those prevalent in the mobile market. I would prefer to sell mobile services on the honest basis of: No flag fall Charge per second (not 30 seconds) 0.25 cents per second Then again - I think that all 'savvy' mobile call buyers will use VoIP over HSPA mobile in the near future and pay 10 cents per untimed PSTN call and 30 cents per untimed mobile call and this whole "capped call" smoke and mirrors nonsense will just disappear. Trackbacks
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My wish is to get a capped plan that truly is capped with no exceptions. (i.e. Video calls, International calls, SMS's, International SMS's, 1300 no's, 1900 competition no's., data charges etc) all bundled into the cap. I have yet to find one.
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....and doubtless you have long ago worked out why that is the case?
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Yeah, Hence the reason I've bought an Exetel Data SIM and tried moving to VOIP over mobile. Unfortunately, my mobile doesn't have native SIP and I have to use nimbuzz/fring etc. This latest Exetel VOIP for mobile app. that Raymond is working on is nice so far, and the final specs/requirements look great! I'm looking forward to his next release to trial... However so far, it's much better / simpler than Fring/etc. Now if only Optus could improve reception to be as good as Telstra's at my home and work so VOIP doesn't drop out/degrade I'd be set
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All of this points to the need for an automated mobile comparison service that could read your bill and tell you what the cheapest plan would be for you at any point in time.
Otherwise, as everyone's seen, the confusion created by capped vs pre-paid vs post-paid plans serves to benefit only the big telcos. How many people who go on capped plans exceed the cap? I wonder if some capped customers just like the idea of knowing what they'll pay in advance - much like "flat rate" internet plans. Comment (1)
I have always wanted to offer some sort of bill analyser but the variables are too great.
One thing you can be certain about - carriers don't offer "capped" plans for the end user's benefit.....just look at the year after year profits they report for their mobile businesses. Comments (9)
I exceeded mine last month. I've previously argued in this blog that my plan is good value (provided I don't exceed the cap). I'm going to do a comparison of all my bills to an Exetel plan tonight, if I get time.
I will of course take into account the 3 months 'free' and the 'free' N95. The 'free' calls to my wife would also apply with Exetel I believe. John, I do hope you wont be dropping your traditional plans. The only reason I haven't ordered one for my spare phone is the $20 sim charge (I honestly can't explain why that trivial amount of money stopped me - but it has) and I am seriously considering canning Vodafone and switching my main phone to Exetel - even though I have been less than happy with their network in my area (I have experienced frequent drop-outs)... Comments (2)
...no..we aren't dropping the simple per second charging plans which, in my obviously deluded opinion, are the only way to buy mobile call services - if you can't get VoIP on your mobile.
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Hmm, looking at the TPG plans
They can work out about 60% cheaper than the cheapest Exetel plan providing you use between 1/3 and all of the allowance. Use less than 1/3 and Exetel's cheaper. User more than the whole package and presumably get badly burnt. The biggest danger with any of these cap plans seems to me to be that once you exceed the allowance, you're suddenly on the $1+ a minute rates which can destroy the value of the cap very quickly! (I can't seem to find the fine print on the TPG site to confirm that this is in fact the case.) As an example: TPG: 80c/min + 35c flagfall ("$300" @ $20) Exe: 15c/min + 15c flagfall (Min $15) Using an example of 2 minute average call length. TPG: $20 = 153 calls Exe: $20 = 44 calls Now, let's have a big month, 200 2 minute calls: TPG: $20 (cap) + $90 (over) Exe: $90 So, I conclude that either TPG is getting very good buy rates from Optus, or they are playing the sucker's game to catch anyone going over their cap. VoIP over HSPA is nice, provided you can put up with the technology. (My E51 works well when it works, but reboots it it hears a fax tone, or mid call at times.) In time the tech will improve, and the E51 is a bit of a dinosaur now. Comment (1)
As far as I'm aware - all "capped" plans are based on either low usage or very high usage plus high costs for the 'excluded' calls (including voice mail deposit and retrieval etc).
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From a user's perspective, the most value you can get on a capped plan is to use 99.9% of the cap, and not one bit over.
For me (I've done this for about 3 years with only one excess charge), it is a simple and find out which date is your monthly bill "anniversary", and reset the call timers on your phone. My average call length is about the same each month, so this covers flagfall too (but build in a safety margin just in case). For instance, I knew that on the old optus $49 cap (with $300 calls), I could use around 3 hours of calls and not go over. This pretty much averaged out, when you include SMS and flagfall. I know that if I approach that limit with still 2 weeks to go in the month, it's time to start cutting back! If, over time, I was ever not getting too close to the cap limit, then I'd go back to an Exetel rate plan, or a lower cap. Comment (1)
here's a calculator to work out how bad some of these cap plans are http://www.mobilechoice.com.au/compare-cap-plans-spreadsheet
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And here's the updated version:
http://spreadsheets.google.com/ccc?key=p1er2CJsp39KBREZvsqzUHQ (Publicly editable) http://spreadsheets.google.com/ccc?key=p1er2CJsp39KzGXdOG3MKdg (Non-editable if someone breaks the other one) Comment (1)
I've always assumed the attraction for capped plans (to the operators) was guaranteed revenue. And I regularly (well as much as I could be bothered) review the offerings and cap plans always seem to win out. So I assume its win win... unless of course you guys really could be offering a better per minute rate if you didn't want people on caps. I did a quick look at my last $20 exetel cap plan detail and worked out I'd still be ahead of the current "by the minute" deal, but your preferred 0.25c a second would be looking attractive. So what's stopping you from offering that? Apologies if I missed that in the explanation.
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There's nothing stopping us doing that except the disinterest of the marketplaces in anything that isn't "capped".
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Here is an article on TPG that you might be interested in:
http://www.smartcompany.com.au/Free-Articles/The-Briefing/20090211-TPG-Internet-agrees-to-stop-misleading-unlimited-mobile-phone-plan-claims-.html Comment (1)
Thank you - interesting to see how Optus Wholesale mobile customers conduct their businesses:
http://www.smartcompany.com.au/Free-Articles/The-Briefing/20081003-ACCC-launches-legal-action-against-telecommunications-scam-aimed-at-SMEs.html Comments (9)
I'm interested, and I am sure there are others out there.
But like I said, I've never found a pay by the second plan that I believe would work out cheaper for me than a cap. So until that changes (and you said you could change this tomorrow) I'm going to assume that even though the real cost of providing mobile call services has gone down the non capped plans are priced to encourage use of capped plans so that the product managers nice chart for next months revenue will match the actual - maybe with some cream on the top if they are lucky. Its just lucky for the operators that most people still want to believe (even if they know otherwise) that "cap" means "that's all you'll pay". I still think you should put out the .25c per second and try change the world one account at a time Comments (3)
"Capped" plans are never "Capped" - hence the ACCC action against TPG and so many others.
We will continue to offer per second plans for those people who use a mobile telephone as something to make calls on and receive calls based on their need to contact people - not based on their need not to pay for something they didn't use. Comments (9)
Capped plans are designed along the same premise of interest-free credit cards. You give someone a good deal up to a limit and then harsh penalties for going over it. They make money out of the fact they we aren't good at budgeting for usage. Treating customers like this really does show your disregard for them. If it works though, I guess that their logic is sound, if morally repugnant.
Pay as you go is the fairest way of doing it and that's a major reason I went with Exetel. Comments (2)
John, I think doing this leads you further down the path of just being like everyone else. Did your marketing people take into account the factor that people consider Exetel's pay what you use plans as your "differentiator". A loss of that image is hard to value.
Also, as a customer I always prefer simplicity over having to choose between a dozen or so different plans. For example, why not just have one HSPA plan instead of nine? You can still get flexibility by making everything optional. Comments (2)
I agree the way we have set up the HSPA plans is wasteful but it has historical' antecedents which we need to move away from before we can change to something simpler.
We have no "marketing people" (we don't even have a "marketing person"). We make decisions based on some discussion looking at some figures and if our decisions don't workout we meet again and change them. We will never go down the "me too" path - I just allow the Exetel "capped plans" because I can't persuade the world to become rational. Comments (9)
"I just allow the Exetel "capped plans" because I can't persuade the world to become rational."
I sympathise with your dissent to the practices of marketing departments - I really do. But, I think you are wrong in thinking everybody on a cap plan is (stupid!, and..) being ripped off. My plan cost is $49 x 21 months = $1,029. Included in this cost was an N95. It was about 09/2008 - at which point the cheapest I could find that phone was over $600 and that was from places I would never buy from. The general retail price from more trusted sources was more like $800+. Even at $600 (which incidentally is the minimum cost of the plan), that leaves an average of $17.875 cost over 24 months for the usage. If I was to sign up with Exetel my minimum cost would be $15 per month anyway, only on my 'cap' I get ~3 times as much usage (I am using Michael Kean's figures for that). As I admitted before, I did go slightly over the 'cap' last month. But, I'm sure I will be more careful in future. Comments (2)
Sorry John, I love your work and I'm not trying to be difficult. I just still don't get it.
I am rational, I'm looking at my bill for last month on a $20 capped plan. There was about 63 minutes of call time (excluding voicemail) totally 72.14 in phoney cap $/min. On an exetel per minute plan (no min spend) that would be about $24 And I only used half my cap! So what's irrational about selecting a cap plan. Am I missing something here. When you offer that .25c per second plan I'll act rationally and take it up. I'm sure others would as well. And you'd be happy. And you said yourself there's nothing stopping you. That seems irrational to me Comments (3)
63 minutes of talk time? Rip off. If you hunt around you can get alot more. For me (no VOIP phone yet but working on it) 3 on a business plan has worked out to be cheap as. I pay 9c per 30 seconds (av call length so far about 4 minutes) with only 22c flag fall. Plus I get free calls to other 3 users (my home network are on 3 (family etc)).
No capped plan so far offers anything that a good PAYG plan cannot beat. Comment (1)
John, don't give in! "Cap plans" I consider a scam - any company who misrepresents the true value of their offerings seem likely to misrepresent everything else, at least by my logic. So I won't sign with one, out of moral.
In my books, $50 = $50. Afterall its a good call rate that matters most. I'm becoming quite a fan of exetel's straight forward, no bs, pricing - and so are my customers. The only hurdle I encounter signing people to exetel's mobile service is the lack of handsets. Its always "oh but I want a handset too!" - which is why I have none. Comment (1)
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