I have just returned from a trip to Israel where I had an opportunity to engage briefly with Gideon, a friend of my son, a graduate student at the Technion. His research combines mathematical game theory with development of inter-carrier agreements, so my son thought that we should meet.
During an interesting range of discussions, he and I shared different perspectives on competition in telecommunications. How many carriers are enough? How much profit is fair? Why are roaming rates and SMS charges so high?
But prices exceeding costs are not unusual in other businesses. For example, I paid $4 at a snack bar for a bottle of cola – coloured water, flavour and sugar. We routinely pay huge mark-ups on coffee.
There are competing options for travellers. I turned the mobile network connectivity for my Blackberry off for the past week, sync’ing when I was within range of a WiFi hotspot; I have prepaid SIM cards for a number of countries that are frequent destinations. Yes, lower priced roaming might have been convenient for people in Canada trying to reach me, although the locals in Israel would have needed to international long distance prices to reach me. So I chose to pay for great coffee and get free WiFi, rather than pay for higher roaming rates for my data connectivity.
But, I also tried out a Wind Mobile phone while I was there. Wind has recently enabled roaming with Orange and I was happy to test the arrangements for them. When I turned on the phone, I received a message that clearly set out the terms of use:
Welcome to Israel! FYI: a call home is $4/min, a text is $1.50 & data is $20/MB. For CS dial 611 & for VM 777 as usual. Enjoy your visit!
Clear information about the rates enabling consumers to make choices about how to deal with their communications needs.
Lots of consumers choose international mobile services based on trade-offs. Paying for convenience; value based pricing. That is how the market works. Isn’t the fact that some people pay for roaming indicative of the products being priced to market? Of course, it might be great for consumers if overseas roaming rates were pennies, not dollars, but there are alternatives, like buying a local SIM card.
Gideon and I chatted about profits in less capital intensive businesses, some related to communications and content; why do people harbour such resentment for profit by some sectors while casting no slings and arrows toward firms making outrageous fortunes?
Why such different perspectives?
The Canadian Telecom Summit, June 4-6 in Toronto, is where Canada’s information and communications stakeholders exchange perspectives and engage in a frank exchange of ideas. You should plan to attend.
Have you registered yet?