Sunday, 23 August 2009

The newer ways of stigmatising

Browsing through the forum for the dissatisfied with the quality of the telecom services, I stumbled upon a comment from a man dividing his friends into callable and not callable… “I mark the people who have their numbers in Play with a star, so that I know who I shouldn’t call if I don’t want to go bankrupt”.

The fourth operator, as it was entering the market in 2007 was granted quite favourable decisions on MTR from the regulator. The discrepancy in inter-operator settlements was justified by the fact Play would have to build its own infrastructure from scratch and by the undeniable truth its offer would boost the competition on the market of mobile services.

The first argument could be disproved – not every entity starting up can get the special terms for conducting the business (apart from tax relieves, etc.), if somebody decides to take the chance and puts a lot of money into a dicey undertaking, they must analyse the competitors’ potential and costs of underselling to convince the clients of the competitor to vote with their feet. The most effective way of drawing new customers is bringing down the prices – so the onset of its activity was marked with the cheap rates and simple pre-paid and post-paid plans, meant to signify its advantage over the “big three”. The bigger price war was sparked off by Play in March 2009, as the operator marked its second birthday with a new pre-paid offer. The new service is not rendered below the costs, but the home truth is that the revenues of the operator come mostly from inflated termination rates. The other operators have thus reason to detest Play. Not only for the sake that more and more of the aware clients ditch them and take their numbers away to Play, causing the operators’ yields to drop. Those are not the termination rates, that’s the crippling price war, in case of three settled mobile providers hitting their balance sheets, in case of the fourth one not letting it break even. From the theory of economics we should know in the long run the price war doesn’t have to be advantageous, even for the customers. The initiator of the fight might be unable to carry the burden of dumping prices and go bust, the other firms on the market may follow suit, so the situation that only the stronger businesses won’t pull out of the market is likely to take place. Moreover, this may lead to a monopolisation of a market. In Poland Play successfully broke the oligopoly set up by “big three” to keep up a fictional competition.

The second argument is backed up by the welfare of the customers. On the market with the barriers to entry the external regulation is often essential to ensure the consumer protection. Play did manage to change the mobile telecom market in Poland. It still has the lead in the stats concerning number transfers and the number of new clients. The price to pay for the rest who stayed with the older operators comes out on their bills or accounts whenever they decide to call a Play user. The rates range currently from 0,72 to 0,80 zloty. In many networks the basic flat rate is currently 0,29 zloty. When looking at termination rates one could see a certain disparity. If the TR for all old operators is 0,1677 zloty and for Play 0,4047 zloty, how big should the rate for calls to Play be? A short calculation tells us it should be 0,70 zloty, so the operators get the extra margin for calls to Play. Many people, conscious of it, were put off by the exorbitant costs of chats with the Play-using fellows.

When taking a decision to transfer my number to Play I deliberately chose to fork out 50 zloty at the time and retain the prefix 608 belonging to another operator. Aside from avoiding the chaos of notifying everyone about the new number I could also avoid comments like “I’ll be paying more for calls to you”. I told those of my friends whose calls to me tend to last more than a quarter, but it never became to them an obstacle to call me if they wanted to talk. I sometimes offered calling back and they took up on it, as the costs of the same call was for me three times lower than for my interlocutor.

The crucial factor for me is the huge amount of perks, special offers, minutes and messages for free, bonuses I get from Play, thanks to which I can spend around twenty five zloty monthly on my phone, instead of over sixty a year ago with the previous operator. I sometimes mind the fact someone pays over the odds, but its their decision to flounder in the clutches of an operator which rips them off. But if you really are so petty to divide your friends into cheap-to-call and expensive-to-call you’re a penny-pitcher! If you don’t feel like paying, ask to call back, you’ll save on your phone bill, but first you’ll have to overcome the embarrassment…

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