Re: Number Portability

Keith Snape wrote:
> In my personal opinion, Sasktel is just a company. Just like every
> other telco in Canada.

No. Saskatchewan is special (see later).

> They want to gain more customers, and they want to retain the
> customers they have. And just like everyone other 'kind benevolent'
> telco in Canada, they want to make money selling their services.

Yes. They do want to make money.

> Be that dropping their price on a service, because it would bring in
> more customers - or offering an alternative service like VOIP.

Maybe. I think it's a matter for debate whether they are trying to
diversify into other forms of telecom purely to gain more customers, or
merely as a tactic to stave off the disruptive VOIPers like Vonage,
Shaw, Skype, raw SIP, etc. Maybe they're trying to win back the hearts
of discouraged customers, or maybe they're trying to stem the hermoraging.

> No company wants to be forced to price their products higher to retard
> their growth, just like no company would choose to lease or sell their
> existing infrastructure at anything other than a pricepoint that would
> result in a profit for them.

And this is where the heart of the matter is. Sasktel is a monopoly in
*Saskatchewan*.

Saskatchewan is STAGNANT. We do not experience population growth. How
do you deal with inflation, development costs, offset the costs of rural
customers?

You charge like a monopoly. You take 0 cost items and you ding the
customers 5$ a month. Caller id? Call display? 3-way calling? All
that stuff comes free from required equipment upgrades that occur over
time as their old switching equipment gradually fails and dies. They
don't have to worry about other companies coming in, because
Saskatchewan is a tiny market (the greater Toronto area is a hell of a
lot more people than all of Saskatchewan!).

When new things come out (like cellular phones), you feel free to charge
whatever you want. Maybe you end up in an oligopoly with Rogers and
some other providers, or maybe you don't because no one else has
bothered to run towers to many of the non-urban communities. You base
your pricing structure on certain assumptions about population
distribution, and who *has to be your customer*.

And when you have them, and they can't go anywhere else, you're free to
charge as much as you want. Some small amount will fight it, but
there's nothing you can do against a monopoly in the rural areas.
*Everyone* has to have Sasktel. *Everyone* has to pay their fees.

The urban folks? That's a different story. Suddenly there's enough
density of potential customers that you get switchers. People going to
alternate cell providers or maybe even using different Internet and VOIP
providers. What's your game plan -- try to out-do the people coming in
(from other markets where they potentially have 3-4 customers for
everyone 1 customer you have), or do you try a delaying tactic?

Sure, Sasktel would love to diversify to get more money (the classic
triple-play is a great way to own houses in an urban setting), but they
don't have to in order to reap huge profits. Rural customers get boned
through and through because no one else will bother to pick up the
crumbs, and urban customers aren't so price sensitive in this market
(AFAICT). Considering Sasktel's behaviour and pricing, there are a lot
of people who still get phone service from them in Saskatoon and Regina.

> As an example - a lot of the Sasktel Max pay-per-view and movie
> channels were originally a leased stream from none other than Shaw.
> Shaw, as the effective owner of those services, was unwilling to
> resell them at cost to competitors. Instead they chose to charge a
> price which most people found to be VERY high - and yet nobody can
> really blame them for it. It's their product, their service, and
> they'd rather not resell it to a competitor at no benefit to their
> company.

Exactly, which is also why Sasktel has been doing the same delaying
tactics. Until (and that's if) they can come up with a plan that will
make them be competitive, since they've been a happy monopoly forever,
they'll continue to act like a monopoly.

> But alas, Shaw isn't a big evil incumbent telco - so nobody cries
> foul. Instead it's fair business practice.

Shaw's not an incumbent, but they're sure bigger than Sasktel. Unlike
Sasktel, they grew to that size by competing with or consuming other
companies. They're still competing, something I can't say is entirely
true for Sasktel.

When was the last time you saw Sasktel try to pimp their wireless,
Internet, or POTS service in Manitoba or Alberta? There's gold in
Alberta, I hear, black gold. Yet they're not pushing into that market
because they're happy with their Saskatchewan monopoly, and they have
developed cost models around having a captive audience. It'd cost them
money to be competitive.

Am I wrong?
Received on Sat Dec 9 17:27:44 2006