Re: Number Portability

Time to wade in again, with my two cents.

Dylan Griffiths wrote:

> 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).

SaskTel is a government backed monopoly. Major policy directives come
from the government. The government also creates regulations that favor
SaskTel in Saskatchewan.

>> 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.

SaskTel is a cash cow for the government. Most of its profits go into
the general revenue fund of the government.

>> 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.

VoIP is the way of the future. Everything is going digital and
wireless, and all of the analog copper lines that SaskTel has laid will
become obsolete in the next 15 to 20 years. If they didn't start to add
these services, they would go the way of the dinosaur.

>> 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*.

Correction, SaskTel was a monopoly in Saskatchewan, after the government
forced the small local telcos to sell out. Now the CRTC has started to
open things up again, and SaskTel is scrambling to maintain its share of
the market.

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

Rural customers are SaskTel's gravy. These rural customers have had the
copper lines in for decades, and the mortgage has been paid on that
infrastructure for decades as well. Maintenance and upkeep of the
copper lines is minimal, and the money just keeps flowing in for
SaskTel, and the government.

> 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!).

This is true, except for small local people :)

> 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.

Until wireless internet became available. I have a client who refused
to get a SaskTel phone line, because it was going to cost them $13,000
for SaskTel to trench a phone line 3/4 of a mile. (I can get fiber put
in at that rate, and still have money left over. I suspect that it is
much cheaper for SaskTel to do the job internally.) That client now has
wireless internet and VoIP, but not with a local phone number, because I
can't get local phone numbers at a rate that I can afford.

Right now, there are several small WISPs in Saskatchewan, as well as
YourLink that provide wireless internet to most of the province. When
SaskTel started putting up their wireless internet service, they did not
take it to the areas that had not been serviced yet, they started in the
large population centers like Saskatoon, Regina, etc. and then moved out
to the areas that were already covered by other WISPs. There are areas
where there are three different wireless high speed suppliers competing,
and areas that do not have high speed service yet.

> 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?

SaskTel has to start thinking about being in a competitive market place,
because it won't be long before all of the big guys start taking an
interest in this market.

> 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?

SaskTel has tried to go into a lot of different markets, usually by
buying up a small player in that market and then pumping some money into
it. So far, the only case where they didn't get their butts booted hard
was Navigata in BC. SaskTel does not know how to market where they are
not backed by the government with a legislated monopoly. If they don't
get their act together, and learn a little about market forces in the
real world, they are going to lose their spot in the Saskatchewan market
too.
Received on Sat Dec 9 22:10:14 2006