Category: telcos

The business of baffling choices

Why do computer and phone companies offer so many plans and models?

In his Daring Fireball blog, John Gruber’s takes to task the view that Apple suffers through not having a wide product range.

John makes the valid point that Samsung seems to stealing market share from HTC rather than Apple but the whole theory of offering too many choices strikes to the heart of two industry’s business models.

Those two industries are the mobile telco business and the Windows personal computer sector.

In the PC world, the wide range of models has been both an advantage and a weakness; it’s allowed Dell and others to create custom machines to meet customer needs but also leaves consumers – both corporate and home buyers – confused and suspicious they many have been taken advantage of.

All too often customer were being had; frequently buyers found they’d bought an underpowered system stuffed with software that either was irrelevant to their needs or an upgrade was necessary to get the features they hoped for.

The entire PC industry was guilty of this and Microsoft were the most obvious – the confusing range of operating systems and associated software like the dozen version of Microsoft Office was deliberately designed to confuse customers and increase revenue.

For the PC industry, the “baffle the customer” model reached its zenith, or nadir, with Windows Vista where Microsoft deliberately put out an underspecced ‘Home’ edition designed to push sales up the value chain.

Compounding the problem, most of the manufacturers followed Microsoft’s lead and put out horribly underpowered systems in the hope that customers would upgrade with more memory, better graphics card and bigger, faster hard drives.

Most customers didn’t upgrade and as a result the Vista operating system – which was horrible anyway – enhanced its well deserved reputation for poor performance.

In the telco sector, consumer confusion lies at the heart of their profitable business model; a bewildering range of phones and plans often leaves the customer spending too much, either through an overpriced plan or paying punative charges for ‘excess’ use.

Having a hundred different types of Android phone adds to the confusion and, by restricting updates, they can cajole customers into ‘upgrading’ to a new phone and another restrictive plan every year or so. This is why you get phone calls from your mobile phone company offering a new handset deal 18 months into a two year plan.

Apple’s model has been different; in their computer range there has never been a wide choice, just a few configurations that meet certain price points. The same model has used for their phones and iPads.

For Apple, this means a predictable business model and a loyal customer base. They don’t have to compete on price and they don’t have to fight resellers and telcos who want to ‘own’ the customer. It’s one of the reasons mobile phone companies desperately want an alternative to the iPhone.

Companies using the baffling choices business model – Microsoft, HP, Dell and your local mobile telco – may well continue to do okay, but that business model is coming under challenge as new entrants are finding new niches.

For all of us as consumers all we can do is make the choices that are simple are reject complexity. Warren Buffett has always maintained he doesn’t invest in businesses he doesn’t understand, perhaps we should have the same philosophy with the purchases we make.

The death of the short message service

How SMS revenues are drying up

The New York Times’ Bits Section looks at how in many countries text messaging (SMS) services are declining.

For telcos, the SMS feature was a happy – and extremely profitable – accident with the Short Message Service feature designed as a control channel for the mobile voice networks.

The Short Messaging Service cost almost nothing to develop and quickly became a massive profit centre for mobile phone companies.

Today in markets where smartphones are dominating sales, people are moving many of their communications away from text messages over to Internet based services like email, instant messaging and social media.

Interestingly, in the United States text messaging still growing although at a slower rate than previously. This makes sense as the US is behind countries that have fully adopted 3G networks and subscribers don’t get the full benefit from a smartphone without a reliable and fast data service.

For developing countries, we’ll probably see SMS continue to grow as the attractions of a relatively cheap and simple communications channel like text messaging still make sense in markets where data plans are expensive and smartphones scarce.

As revenues from text messaging drops, we’ll be seeing more telecommunications companies try to replace the lost income with other services. Expect to see more offers for various business and home service bundles and offers to upgrade to the latest phones or packages as providers try to lock profitable customers into cash generating agreements.

The era of accidental profits for telcos is over, the quest for these companies now is to find how they can maintain profits in an era where data services are commoditising their lucrative product lines.

For the managers of these companies, the challenge is on to successfully do this – it remains to be seen how well they do in refocusing their businesses.

Why small businesses aren’t using cloud computing

The IT industry needs to understand cloud services and small business

As part of their push into online applications, telecommunications company Optus yesterday released their Digital Ready report examining Australian small business’ use of cloud computing services.

One of the notable results is that only four percent of small business proprietors claim to use cloud computing services and 59% are unsure of what exactly cloud computing is.

Those results are surprisingly poor and indicate businesses don’t see the benefit or value in cloud computing services. There seems to be a number of factors driving this.

Misunderstanding cloud computing

That over 90% of small business owners claim not to be using cloud computing indicates many simply don’t know what these services are. If asked most would admit to using Facebook, web mail or some other online or social media platform that runs on cloud computing.

That’s an education issue and if anything is a criticism of those of us – including myself – who are trying to explain the concept. We can do better as an industry.

Security

Many businesses, big and small, misunderstand technology security risks and have an inflated view of how secure their own desktop, networks and servers are. In many ways the security of cloud services is better than most small business IT systems.

Where the security argument falls down is in the hyperbole of many IT security vendors – every month we hear breathless reports, repeated by gullible technology journalists, of how smartphones, social media or Apple Macs are going to be struck down by a new wave of viruses and each time the “threat” quietly fades away into obscurity.

As long as hysterical fear stories about the security of smartphones and cloud services circulate in the media, it’s understandable that small business owners will be wary of trusting technologies they don’t fully understand.

Sunk costs

Many established businesses have sunk costs in existing software and hardware. For proprietors or managers to justify moving a new service, whether it’s on the cloud or not, there has to be a clear financial benefit in doing so.

Terms of Service risk

Cloud services – whether free or paid – come with a set of terms and conditions. Online Payment, social media and other cloud computing services have shown themselves to be quick in shutting down business accounts without warning, any due process or an accesible way to resolve disputes.

Quite rightly, many business owners are wary of risking key processes or data to services that might cut them off without notice and who often lack a customer service culture.

The reluctant advisors

Business IT consultants struggle with cloud services. Cloud services are a threat to those used to making money from selling servers, software and desktop computers.

For the more far sighted consultants, the thin margins offered by cloud services mean they have to rely on fees for service. If something goes wrong, the client’s first call will be to the trusted advisor and not to the service providers’ helpdesks.

This is a headache too far for many consultants as they know they’ll probably not get paid for the time spent sifting the truth in a blizzard of vendor finger pointing. It’s far less risk and more profitable to recommend a server and desktop solution.

Is cloud computing important?

For businesses, the economics of cloud computing is changing industry dynamics. With lower capital costs, it makes enterprises more flexible and responsive to changing markets.

Cloud services are critical to businesses – for established companies they’ll find themselves losing out if they don’t at least consider the advantages and choose the right online tools.

The onus right now though is on cloud computing vendors to tell their stories better and demonstrate why they can be trusted with key business processes and valuable data.

Dealing with a telco dispute

ten ways to resolve a phone company or Internet problem

Once again, Australian telcos find themselves being criticised by regulators and consumer groups for their poor performance. This time over poor service, complexity of bills and overcharging on “freecall” numbers.

The frustrating thing with all of these complaint is they are nothing new, as shown by an earlier version of this article in 2007.

So the problems with phone and Internet companies remain and many customers, both consumers and businesses, are forced to go through the time wasting dance of dealing with call centres, complex contracts and often finishing with consumer protection organisations like the Telecommunications Industry Ombudsman or other state and Federal authorities.

However there are ways of reducing the problems and improving your chances of resolving issues quickly and on your terms;

Call them

The first step when you realise you have a problem is to call them. This is the quickest and easiest way to resolve things. If you can solve the problem at this point, you will save a lot of time, money and frustration.

When dealing with any call centre, there are a few important things to remember. You must remain polite, you must never make threats and you should note everything. A lot of this can be easier said than done.

Take notes

From the first call, you must take notes. Every time you speak to the call centre you must note the date and time you have made the call, the time they answered, the name of the person you spoke to, what you discussed, what was agreed (if anything) and the time the call ended. Any important discussions should be confirmed in writing.

Be Calm and Polite

At every stage of the process you must stay cool and polite. Do not lose your temper and do not abuse people. If you find the person you are dealing with is rude or provocative, or if find your blood pressure rising, then politely finish the conversation and call back later later.

Don’t Make Threats

Making threats will hurt your argument and draw the process out. Threatening people only makes their attitude harder or locks them into a position where they cannot negotiate with you.

Suing the ISP, complaining to the TIO, going to the media or calling consumer affairs are all options you have available should everything else fail but the aim is to settle the matter quickly and amicably without going to the time and expense of complaining to other authorities.

Do it in writing

It is important to confirm everything in writing. All too often people believe a matter has been settled only to find it is still a problem months or years later. Follow up any important conversations with a letter confirming the details including the time, date and person you discussed the issue with.

This is very important if you have reached an agreement settling a billing dispute. Confirm the details and the agreement in a letter sent by registered post to the organisation, any faxes or emails should be followed up by a letter.

Any emails about the matter should be printed out. Despite the claims of a paperless world, the only thing that really matters in disputes is what is written on paper.

Make sure you keep the full story in writing and this includes printing out emails and web pages.

Follow the ISPs complaint procedure

You may need to start a formal complaint within the organisation’s internal complaints or appeals procedures, the ISP or telco support line should be able to tell you how to do this. For smaller ISPs there may not be any formal procedures. A letter to the senior management may be necessary to get the right person to respond.

Contact the ISPs management

If the ISP doesn’t have a formal dispute procedure, or if it doesn’t respond, forward your complaints with copies of all the supporting documentation to the directors and Managing Director or CEO of the company concerned.

Generally directors and senior managers hate this and will make their displeasure known to the people responsible within their organisation. Again, be polite and respectful, make no threats and express your desire to settle the matter quickly and amicably.

Pay the bill

Some ISPs have a habit of calling in the debt collectors at an early stage. This complicates the matter and can also affect your credit record. Generally, it’s a good idea to pay any disputed amounts and then continue arguing about the facts of the dispute.

If you have direct debits with the ISP it may be necessary to stop these to avoid further disputed debits to your account. Do this in writing to the both the ISP and your bank with a cover letter informing them the direct debit has stopped. If you do this, make sure you are within your contract and you have a backup Internet service as the ISP will almost certainly stop your service immediately.

Complain to the TIO

If you are still unhappy, complain to the Telecommunications Industry Ombudsman. They like you fill in their web complaint form but they will accept phone calls and written complaints.

Keep in mind they will not help you unless you’ve already tried to resolve the problem with the provider, they also won’t assist if you’ve complained to other organisations which is another reason not to make threats earlier in the process.

Further complaints

Despite all of the above, it’s still possible not to have resolved the problem with an ISP. The next step is to complain to your state consumer affairs department or the ACCC. You can also seek advice from your solicitor or local community legal centre.

The aim with any dispute is to settle it quickly and amicably. The important thing is to contact your provider quickly if you have a problem. Internet providers can be difficult to deal with but with a combination of patience, persistence, good record keeping and a cool temper, you can resolve most problems on your terms.

ABC Newcastle and Upper Hunter: Dealing with a telco dispute

Dealing with a dispute over an Internet or phone bill can be a frustrating experience. But there are ways to deal with the problem and get the result you want.

Join Carol Duncan and Paul Wallbank from 2.40pm on Monday, September 20 to look the best ways to reduce stress when dealing with call centres and billing departments.

We have further information on this topic at Dealing with an ISP dispute.

Tune into ABC 1233 Newcastle or ABC Upper Hunter from 2.40pm or listen online through the ABC Newcastle webpage. We love to hear from listeners so feel free call in with your questions or comments on 1300 233 222 or text on 19922702. If you’re on Twitter you can tweet paul at @paulwallbank and 1233 Newcastle on @1233newcastle.

Dell’s $70 netbook bundle

Vodafone’s $70 a month bundled laptop deal sees them joining Optus and Telstra in offering these plans. To date, there’s been almost zero uptake with these products as the dealers don’t seem to know or care about them.

Let’s see if Vodafone and Dell can do a better job of marketing these packages.

For consumers, it would pay to shop around on these deals as Vodafone currently offer the 5Gb data plan with a free modem for $39 per month.

Over a 24-month period (which is what we’ll have to assume the plan is without any further information) then the package costs $1,680. If we subtract the data component of $936 (24*39) that “free” netbook will cost $744.

Not bad, based upon Dell’s list price of $699 that’s a 3.2% APR, but you can be sure Dell and other netbook vendors will have better deals on their computers next month.

It always pays to do the sums closely before committing to these contracts.

Commander appoints receivers

Last January I commented on Commander’s problems and made the point I thought they were doomed. Today they appointed official receivers.

I’ve made a comment on my Cranky Tech blog about the tragedy that companies with brilliant assets like Commander managed to squander them, but there’s many other lessons for Australian businesses which I’m mulling over at the moment and will post here later.

Will the iPhone see Australians embrace mobile Internet?

Reports the iPhone has triggered a rise in mobile Internet use in the US raises an interesting question on its effects on the Australian market.

Early this year Three Mobile touted their own report which found Australians were reluctant to do surfing the net on their phones due to the risk of copping a monster bill.

Sadly this belief is quite fair when you see some plans charging up to $3,000 a Gb if you go over a 5Mb monthly allowance.

While Optus has sweetened their plans slightly by offering better usage allowances on their iPhone plans, all the providers have done little to improve their mobile phone data offerings.

This stingy attitude to data by the Australian mobile operators is going to continue to cramp the growth in the Australian mobile Internet market.

Until one of the players drops their restrictive plans and outrageous excess use charges Australians will quite rightly shy away from embracing mobile web surfing.

The Australian iPhone release

iphoneApple’s announcement the iPhone will be released in Australia through Optus and Vodafone sets the stage for a good fight in the mobile phone sector over the next twelve months.

Leaving Telstra out of the deal is going to put a lot of competitive pressure on the big T, but their advantages in brand name, market position and mobile coverage gives them plenty of scope to fight back.

Another interesting angle on this is the pricing. The $199 and $299 US dollar prices will probably translate to around half the price of the comparable Blackberry and a third of the Nokia smartphones. This is really going to make the incumbents sweat.

So we’re going to see some terrific deals over the next few months and the carriers and handset manufacturers jostle for space in the market.

If you’re looking at buying a mobile phone the best advice is to wait a month or two.

Telstra’s $0 plans

Telstra’s new bundled plans offering a free laptop with their wireless plans is a good move to improve take up of wireless Internet.

It’s surprising none of the providers haven’t offered these deals sooner given entry level laptops are cheaper than mobile phones and these plans have proved an resounding success in the mobile industry.

As with all these deals, the devil is in the small print. You may be getting a “free” laptop but the cost of the wireless broadband will easily make up for this. The total price of the plan over the 36 month contract is $3,564 which would buy you a lot of laptop.

36 months is a long contract and we can expect to see prices drop and better deals appear as the other companies respond.

Also, a $700 laptop is a pretty basic beast many business users will find doesn’t meet their needs.

Overall, this is an interesting deal that’s going to radically change the business market. However I’d recommend most users sit and wait to see what other deals become available.