Vodafone 3G USB Stick

[mgcarley]

Carley...
No mate, my math is not flawed. My Marginal Costing concepts are very strong - i have considered this difference in Fixed costs by mentioning 'if its Rs.10 in NZ, it will be Rs.100 in India....

That's right, because if we continue to assume a 10:1 ratio of population, and a fixed cost ratio similarly of 10:1, then assuming that the ARPU is the same, the payback time also will be the same.

And even in your example.....here are the figures:

NZ: $2 Million Fixed costs in all, with 100 Customers.....
We have to assume that the "Contribution" per customer, ie, Sale Price (Here Service charge) Less Variable Cost per customer....(This is because if you want the Rates similar to India, and as you mentioned, the running or Variable costs are almost similar - so assumption is a very scirentific one)




Say we assume it at $2000 per customer both in India & in NZ....


Stop right there. That's COST per customer, not contribution. What I've been talking about is that we STILL have rates of over Rs15 per minute, and even the smallest plans still come in at Rs1300 or so, causing the ARPU in NZ is much higher than in India.

Then your Fixed costs will be recovered only when you have ($2million/$2000 per customer) = 1000 customers.....
Compare this to the 100 customers you cover.


That's 100 customers PER TOWER, so that means to cover 1,000 people I will need 10 towers, whereas to cover 10,000 people I will need 100 towers, causing us to have $2m and $20m respectively in fixed costs, however with 1,000 and 10,000 in population respectively, the ARPU needs only to be the same.

Now take India.....
The Fixed costs is $20 Million. So we need ($20million/$2000 per customer) = 10000 customers.....
Compare this to the 10000 you had mentioned......

So, we just break-even at that Contribution level....
This is tabulated below -

Required no. of Customers___Actual no. of customers___Shortfall
NZ__________1,000__________________100_______________900
India________10,000________________10,000______________NIL

So it is quite evident, that the cos will seek to recover this shorfall by charging atleast 10 times higher than the charges in India.....
PS: I have done a lot of R&D in these kinds of analyses, where the sheer volume is targeted, just to charge low prices from customers.

This is why your math is flawed: They won't built a network *in NZ* for 10,000 people if the population isn't there to support it, they will build one for 1,000. Considering you've wrongly interpreted my 100 customers per tower, in actual fact the shortfall you're anticipating doesn't exist.

What I've been saying is that in REAL numbers, the cost per customer works out similarly when we take in to account the things like the cost of each tower, spectrum price between the 2 countries - that is, somewhere between $1 and $1.50 per year per person for spectrum (in real numbers, that is), cost per tower per subscriber must be about the same, yet, unfortunately despite all this and 3G having been in NZ now for over 5 years, we're still seeing very high prices from (for example) Vodafone NZ even by comparison with Vodafone in various European countries - and that's AFTER the exchange rate (meaning the price parity is again halved)!

 

[Jaymin]

You only accepted it that ARPU is higher in NZ than in India......that itself proves my point!!I only wanted to say that in order to recover a said amount in a fixed time frame, the only option left is to increase the prices!!And as regards the actual costing of the towers and equipment and all - i wont be able to say much, coz i havnt gone in those details!!I just gave a general overview, based on some Scientific/Logical assumptions.....

 

[mgcarley]

You only accepted it that ARPU is higher in NZ than in India......that itself proves my point!!

I only wanted to say that in order to recover a said amount in a fixed time frame, the only option left is to increase the prices!!
And as regards the actual costing of the towers and equipment and all - i wont be able to say much, coz i havnt gone in those details!!

I just gave a general overview, based on some Scientific/Logical assumptions.....

You're missing the point. The actual spend per customer in building the network is roughly the same in either country, irrespective of how much is spent at the end or how much anything actually costs.

Yes $2.5b for India's spectrum might seem high compared to NZ's $27.8m, however Vodafone has something like 80m customers in India, and I would estimate around 1m mobile customers in NZ (they claim a total customer base of 2.5m but that sounds a bit high to me, and as mentioned, I suspect it consolidates also their landline and broadband products as well), but whichever way you look at it, the numbers work out to be in the same vicinity of cost per customer - perhaps even a little less in NZ.

The ARPU in NZ is higher in NZ than in India mostly because we have tariffs of Rs16 per minute (or more) whereas India has tariffs of Rs1 per minute, in other words, all else being equal, Vodafone makes significantly more per customer in NZ than it does in India, and although it is my belief that high termination rates do play a part in contributing to the retail price difference (in India it has to be less than Rs1 per minute, but in NZ it's about Rs7 or so), I can't otherwise justify why we pay so much more here than you do for either voice or data.

Keeping in mind that apart from high voice tariffs, Vodafone also charges as much as NZ$60 per GB, which is around Rs2,000, even though the wholesale rates on international bandwidth are about the same. It makes even the worst offerings in India on ANY provider (even at Re1/MB) look like a hell of a bargain!

 

[Jaymin]

Carley....
Ok, so you actually mean to say that the "Fixed Cost" Spent is same on a per customer basis in India as well as in NZ??

If thats so, then i cant understand why they are charging you so much!!

---------- Post added at 01:23 PM ---------- Previous post was at 01:10 PM ----------

PS: Sorry for taking so long in getting to the root of the issue we were discussing since so long!!

 

[mgcarley]

Carley....
Ok, so you actually mean to say that the "Fixed Cost" Spent is same on a per customer basis in India as well as in NZ??


Yes, that's what I've been trying to get at.

If thats so, then i cant understand why they are charging you so much!!


Neither can I. Which is why I've been bashing VodafoneNZ on Twitter: I can't justify the costs anywhere. Vodafone in other countries doesn't charge anywhere near what we get charged - Vodafone Qatar charges NZ$0.13/minute and as we know, the Middle East is notoriously expensive for phone and Internet (even domestically).

Worse is that I can call mobiles in Australia, India and numerous other countries from many providers here for cheaper than I can call an NZ mobile - for example, from my NZ landline, it costs me $0.22 to call my wife in India, whereas it costs me $0.30 to call my mother/father/sister/brother within NZ on mobile (local calling on a landline is free and toll-calls are about $0.05/min or you can get like 2 hours for $2 or so).

But when I can call my Australian wholesale bandwidth sales rep on his mobile in Sydney for $0.29 or I can call mobiles in numerous other countries (including but not limited to Singapore, HK, the USA, Canada, South Korea and some really interesting countries like most of the Caribbean, American Samoa, Gabon, Thailand, Mongolia and numerous others) for anything between $0.05 and $0.25 per minute, something is wrong.

And from a mobile it's even worse: Vodafone and Telecom charge standard rates of NZ$0.89 for prepaid subscribers (Rs30), with 2Degrees offering some competition at $0.44 (and lesser-rates for on-net calls). I've been asking why our rates are so high to the 3 major terminators in NZ: Telecom NZ, Vodafone NZ and 2Degrees, but have yet to receive a good response (and for all the other operators in this country, they are actually just piggybacking on Vodafone).

Of course, this is something I should leave to the NZ forums, but whatever Vodafone ends up charging for 3G access once the services become popular or whatever FUPs end up being applied to "unlimited" plans, just think about how much more we get ripped off down here

And now, back to topic. I've told my Mrs to get one of these 3G sticks to solve her internet connectivity issues between 2 houses - I hope the service itself turns out to be satisfactory.

 

[Jaymin]

So, its a sad story to sum it up all....You ppl are exploited by the telecom providers. Dont you have any equivalent of TRAI over there?? I think, it can regulate to some extent!!

 

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[mgcarley]

So, its a sad story to sum it up all....
You ppl are exploited by the telecom providers. Dont you have any equivalent of TRAI over there?? I think, it can regulate to some extent!!

We have something called the Commerce Commission which regulates pretty much everything consumers can buy, plus there are other entities like the Ministry of Economic Development and so forth, but the Commerce Commission is the one who says what providers can offer to customers or not.

 

[Jaymin]

But then they dont appear to be saying anything rite?? Else you people wouldnt have been exploited this much!!

 

[mgcarley]

But then they dont appear to be saying anything rite?? Else you people wouldnt have been exploited this much!!

Like the TRAI, they have made recommendations that the termination rates be reduced from ~16-22c p/m down to 3 or 4c, but like in many countries, the corporations do all the real governing

 

[Jaymin]

Yeah, just as the TRAI is just a namesake in India - may be doing some good, but else, it appears like the agent of these players!!PS: btw, i m njoying the Ind-NZ test a bit for now!!