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Mark Pesce and Stilgherrian are talking about starting their own telco. More power to 'em, I say, but I suspect they're in for a rude shock. Running a telco isn't as easy as it looks. The big telcos make it look harder than it is through beurocracy, but it's still hard.
They talk about creating an MVNO -- a white-label mobile operator using someone else's network. The problem is that the deals you get as an MVNO without much volume just aren't very good, which is why there aren't any out there offering particularly good plans. I use an MVNO myself (and work for another) run by an ISP who I don't use, becausde their plans just happen to match my usage profile: not many calls, a moderate amount of texts, and lots of short calls and texts between me and my partner, which are free. I can guarantee you Exetel aren't making a lot out of me.
The basic problem with the MVNOs is that the wholesaling operator doesn't want to canibalise their high-profit areas. They'll structure the deal so that you can't offer deals attractive to their most profitable customers.
Mark is annoyed that all the iPhone plans come with piddling amounts of data, and punitive over-quote data rates. But if you get one of their "data" deals, where you plug a USB thingy into your laptop you can get mobile data at much better rates. I'll explain why they do this below, but the big secret they don't want you to know is that those things are just mobile phones. I've heard that with some providers you can actually stick them in a phone and use them, even for voice.
Virgin also offers a "fixed" broadband wireless service over the Optus network with pretty generous voice and data plans. Quite an attractive deal, except for the problems that are being reported with it. You can't use it in a mobile context though, which would massively help them in terms of planning their network upgrades.
So why do telcos have different data prices for handsets and data cards? The reasons are segmentation and mobility. With data cards, they can sell you another service on top of your mobile plan -- you'll notice the most attractive deals require you to also have a mobile with them. Another of the secrets they don't want you to know is that you can use your 3G mobile for internet access on your computer via Bluetooth. It works just fine, except for the punitive data prices on your mobile SIM.
The other issue is mobility. Despite the fact that with a mobile data card, you can travel down the highway using it, most use it in a familiar context. Sitting down somewhere and not moving. This makes it quite a bit easier to plan for, whereas if everyone was whizzing around from cell to cell using prodigious amounts of data, it'd get quite hard for them.
You have to remember, this is an industry used to making 25c out of something that costs them, effectively, nothing. SMS uses spare capacity on the network yet makes them a fortune. They see data as the next cash cow. If they started offering phone+data plans, they think they'll lose all the people using those data cards switching to just using their phone.
Another part of the problem is that users want a "free" or subsidised phone. Where do you think they claw back that money? So the real solution for you would be to buy the phone outright, and sign up for one of the more attractive non-iPhone plans. Possibly even with 3, assuming you're not going to be using data outside the capital cities.
PS: Mark and Stilgherrian, get in touch when you've realised that you can't be a telco without a billing system and customer service setup. And that both such things are very hard. Then I'll clue you into some of the other hard parts. But good luck. If you make it happen, I'll be one of your first customers.
11 Jul 2008 16:27 [category: /geek] #
I watched SBS's Insight on Tuesday this week. It's a discussion programme and this week's episode was about petrol prices. You couldn't find a more shameless group of rent seekers than the majority of the people commenting during the programme. They all want to be given government help to cope with petrol price rises.
The independent owner-operator truckies were loudly whinging about prices, calling for petrol excise to be removed. This is the group that enthusiastically embraced casualisation of the workforce, accepting risk in return for a slight improvement in profits. I have one suggestion for you: your costs have gone up, raise your prices! It doesn't take an economic genius to work it out now, does it? If you don't want to take on the risk of being an owner-operator, become and employee and form a union.
The student who travels hours each day to drive from her farm to university and work, spending $120 a week on petrol, I have a suggestion. $120 a week would get you a room in a half-decent flat share in any city in Australia. It might not be in the salubrious suburbs of Sydney but a flat in, say, Strathfield, would be fine. Petrol prices aren't going down, so you need to consider it. If you managed to get rid of the car completely, add another $5,000 to your annual housing and transport budget.
The price signal clearly isn't working. SUV sales up to May were up and I haven't noticed any decrease in the number of giant vehicles on the road. It seems to finally be kicking in though. Perhaps if the CSIRO's prediction of $8/litre happens, people will finally work it out.
The calls for reduction or removal of petrol excise are from the same kinds of people who would scream if other taxes were increased to pay for it. Here's the problem: petrol excise and vehicle registration pays for a small fraction of the full cost of road transport in Australia. If we had a true user-pays system, the excise would be going up, not down.
Removing excise and putting the burden on all Australians would penalise those of us who made sensible decisions about housing and transport, paying more to live closer to our workplaces and using public or petrol-free transport. I'm sick of subsidising you lot, so quit the moaning.
And, of course, we're all subsidising the road freight industry. They pay a tiny fraction of the costs they incur on our road infrastructure, to say nothing of the pollution. When Carlton United Breweries relocated their brewing from Sydney to Brisbane, how do you think all the (high volume, high weight, low value) beer gets to Sydney? That's the kind of behaviour we need the price signal to prevent!
Roll on $8/litre.
