mgcarley
Founder, Hayai Broadband
I appreciate your in depth explanation about the pricing elsewhere and do realize that every ISP paid a fortune to acquire that 3g spectrum but India as a country is a lot bigger than NZ etc & hence a lot more subscribers(additional opportunity) + cheap labor also adds to this. But either ways what is more important is the earning capability of an average Indian - i assume this is a lot lesser than NZ. NZ's can afford to pay that much for every other service but not many Indians can.
P.S: I'm not trying to start a debate but rather trying to understand if it's really a fair pricing. But otherwise i still find 21gb for around Rs. 2000 is a good and agreeable deal for mobile broadband - used on phone
Clearly you've never been here. New Zealand, while a "westernized" country, is one of the poorer ones in the OECD.
Yes, I understand that India is a much larger country, but this is why I'm talking about per subscriber costs, which make the actual volume basically irrelevent - you don't build a network capable of handling 100 million people if you only have a subscriber-base of 2 million in a country with 5 million.
The price-per-GB at the wholesale level is about the same, the spectrum cost per subscriber in NZ is less (about NZ$1.30 per month per subscriber versus something like NZ$2 in India). Things like cell towers cost basically the same worldwide and if Vodafone customer service reps are earning on average 3 lakhs per annum, then the per customer cost in NZ is only about 3 times as much - yet we're paying about 20 times as much for the services.
Furthermore, the network has been operational for 5+ years now, so much of their capital expenditure costs have been amortized already and it's just upgrades/maintainence mode now. Vodafone NZ made $211 million profit last year - good for them, but that's over $200 per subscriber - which doesn't sound like much until you read just how padded they had to make their expenditures. They've been paying $60 million a year to their own spectrum holding company - for spectrum which costed under $30 million for 20 years - this means every year, VF NZ's spectrum holding company makes some 4000% profit year on year (40x the spend). If they were paying "themselves" $5 million or $10 million, this might not be such an issue.
I worked out all of the costs in a spreadsheet - costs of leases, towers, retail stores, spectrum, software, cabling personnel based on publicly available information and came to a total network value of about $1b, which works out to about $20/subscriber/month over 5 years (minimum top-up on prepay here is $20 anyway, and on prepay that would get you about 20 minutes of talk time + 1000 smses). Vodafone went on to tell me my numbers were "way off", claiming values of $3b - but then of course being a public company I got the chance to get ahold of their financial statements for last year which said the value of the network is... $1.1b.
Anyway, what this boils down to is, despite the approximate CPC (cost-per-customer) for providing services in India versus NZ being roughly the same (excepting mobile termination rates), NZ customers are forced to pay many multiples what you do - $60-100 per GB is not affordable here - what I was trying to highlight is the price disparity that shouldn't exist because pretty much all else is equal. Rs600/NZ$20 per GB can be done in NZ, as is being proven by the only new player to have it's own towers - 2Degrees - but VF and Telecom NZ are still charging on average $60/GB, keeping their ARPU (average revenue per user) what seems artificially high - and this is what makes my blood boil.
Besides, the whole volume argument doesn't explain why countries like Norway, Sweden, Finland, Singapore and Hong Kong (all subscriber bases of
P.S: I'm not trying to start a debate but rather trying to understand if it's really a fair pricing. But otherwise i still find 21gb for around Rs. 2000 is a good and agreeable deal for mobile broadband - used on phone
Clearly you've never been here. New Zealand, while a "westernized" country, is one of the poorer ones in the OECD.
Yes, I understand that India is a much larger country, but this is why I'm talking about per subscriber costs, which make the actual volume basically irrelevent - you don't build a network capable of handling 100 million people if you only have a subscriber-base of 2 million in a country with 5 million.
The price-per-GB at the wholesale level is about the same, the spectrum cost per subscriber in NZ is less (about NZ$1.30 per month per subscriber versus something like NZ$2 in India). Things like cell towers cost basically the same worldwide and if Vodafone customer service reps are earning on average 3 lakhs per annum, then the per customer cost in NZ is only about 3 times as much - yet we're paying about 20 times as much for the services.
Furthermore, the network has been operational for 5+ years now, so much of their capital expenditure costs have been amortized already and it's just upgrades/maintainence mode now. Vodafone NZ made $211 million profit last year - good for them, but that's over $200 per subscriber - which doesn't sound like much until you read just how padded they had to make their expenditures. They've been paying $60 million a year to their own spectrum holding company - for spectrum which costed under $30 million for 20 years - this means every year, VF NZ's spectrum holding company makes some 4000% profit year on year (40x the spend). If they were paying "themselves" $5 million or $10 million, this might not be such an issue.
I worked out all of the costs in a spreadsheet - costs of leases, towers, retail stores, spectrum, software, cabling personnel based on publicly available information and came to a total network value of about $1b, which works out to about $20/subscriber/month over 5 years (minimum top-up on prepay here is $20 anyway, and on prepay that would get you about 20 minutes of talk time + 1000 smses). Vodafone went on to tell me my numbers were "way off", claiming values of $3b - but then of course being a public company I got the chance to get ahold of their financial statements for last year which said the value of the network is... $1.1b.
Anyway, what this boils down to is, despite the approximate CPC (cost-per-customer) for providing services in India versus NZ being roughly the same (excepting mobile termination rates), NZ customers are forced to pay many multiples what you do - $60-100 per GB is not affordable here - what I was trying to highlight is the price disparity that shouldn't exist because pretty much all else is equal. Rs600/NZ$20 per GB can be done in NZ, as is being proven by the only new player to have it's own towers - 2Degrees - but VF and Telecom NZ are still charging on average $60/GB, keeping their ARPU (average revenue per user) what seems artificially high - and this is what makes my blood boil.
Besides, the whole volume argument doesn't explain why countries like Norway, Sweden, Finland, Singapore and Hong Kong (all subscriber bases of
