Rudy’s open letter to vodafone and some insights on it ..

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My good friend Rudy De Waele wrote this interesting letter to vodafone. Full text and link below. Its creating quite a stir in blogosphere .. and I hope someone at vodafone takes notice!

I have added some more insights to the letter below from forumoxford

But first, Rudy’s letter in full

Dear Vodafone Staff,

Yesterday I received another MMS advertising from you. Normally I don’t put too much attention to them because they are mostly services you promote I’m not interested in, but this one this time took my attention.

The ad went something like this: “You can now subscribe to a monthly flat fee for only 3 Euro/month to navigate Vodafone live!”

At first I thought: this is it, the first ad I receive that fits my needs for browsing the mobile web, so I decided to call your customer support. I must admit I was a bit misled by interpreting the Vodafone life! as accessing the Internet from my mobile.

I am a regular user since 2001 of your voice and SMS services and have 4 other accounts for my wife and daughters using the same services. I am not interested in browsing the Vodafone life! services to download ringtones or wallpapers or receive sports news or whatever’s there. However, I also use your 3G Mobile Connect 3G data card – with 384 kbps UMTS & up to 85.6 kbps GPRS/GSM connectivity – and I’m really happy with it, it’s great to be able to connect my laptop anytime, anywhere.

So I called Vodafone customer support and asked for the details. The flat fee rate appears to be for navigation ONLY within Vodafone life! portal and services. I explained the girl on the other side of the phone I need to surf the mobile web for my professional activities and asked if you had any plans like this. Since I also use your 3G Mobile Connect 3G data card, to me there is no difference accessing the web from the mobile or through your data card on my laptop and I have a fixed rate for the data card I use. The girl answered me that the default option to navigate outside of Vodafone on my mobile is 0,50 Euro (!) per connection and there are no other existing flat fee rate plans yet.

I think there is something completely wrong going on here… For my work and research I surf (connect) the mobile web at a minimum average rate of 10 times a day at 0,50 Euro/day, resulting in an excessive 150 Euro/month extra added to my bill just to surf the mobile web (!)

Let me ask you, do you really think this a fair price for being able to surf the web anytime anywhere?

That’s nearly 4 times the price of my high speed ADSL connection I have at home and which we share with the whole family? I am not interested in surfing Vodafone live! but I’m your customer with a need to browse the mobile web (and I’m sure I’m not the only one). You will probably consider I’m an early adopter but isn’t it about time to create plans for people like us? I cannot remember having paid such excessive pricing to acces the internet as an early adopter in 1995.

I would like to suggest it’s maybe better to start embracing the people who want to push the mobile web forward? In the end, we are all existing customers who can even bring in other ones (which of course I consequently do when I’m happy with services). In the end we will create the services and/or applications that people will acces through your networks in the near future. Or then I should just use the data card chip on my phone to surf the mobile web and have a separate account to handle my phone calls? At least this option might be more reasonable in price for me.

I really would appreciate, as a 5-year loyal customer, you will consider my request to find a better solution then what currently exists.

Yours sincerely,

Rudy De Waele, Barcelona, Spain.

The link to his blog HERE

The issue really is of flat rate charging – something I have blogged about before in context of mobile multiplayer games packet fees: boon or bane for mobile multiplayer games

There are two fantastic responses from forumoxford that add more insight to this issue

Firstly from Jonathan Crooks

I agree that none of the European opco’s are adequately addressing the charging models that end users would like to see. I believe there are some good reasons and some bad reasons for this.

I have worked in wireless (GSM and 3G) infrastructure suppliers for a long time and have some understanding of how the actual networks work.

There are some fundamental differences between how GPRS and UMTS data services are delivered over that most scarce of resources, the radio (and I include the cost of the relevant infrastructure here as well).

In short GPRS access effectively competes for voice access in the 2G network – so any attempt to offer a flat fee model has to consider the potential lost revenues from those voice calls that cannot now be made due to lack of bandwidth. In the case of VF Live! there are alternate revenue opportunities for VF other than the pure per MB charge and clearly they believe they can recoup their lost revenue this way (or at least swap it for some branding advantage).

For UMTS – this is largely unused spectrum at this time and there is plenty spare for devoting to data services – such as the 3G data card package. 3G is not a service but a network capability and at the moment the voice services on offer over 3G are not very compelling – thus there is very little take up in the consumer market. However data services (mobile web browing from a PC, corporate VPN etc) is quite compelling at up to 384KBps and this is a differentiated service – hence the offer of flat rate packages. Granted sometimes there is no 3G coverage and they use GPRS (thus getting back into that lost voice revenue issue)- this is just something VF has to live with in order to promote 3G services.

For the longer term, as 3G handsets are now almost indistinguishable from 2G handsets there will be much more uptake of 3G voice (albeit unknown to the user) and you could imagine this issue (voice vs data revenue) will raise its head again in a few years.

Fortunately from a technological basis this is not necesarily the case – fundamentally the 3G radio interface is potentially far more efficient at carrying different QoS services (voice, video streaming, intenet browsing etc.) and whilst is not at its full potential now, will be in the next year or two (for those aware of the acronyms I am talking about HSDPA, HSUPA and even LTE but I think the latter is a long way out and may not turn out to be very easy to deploy seamlessly).

[QoS - quality of service - e.g. slow but on time, fast but with delays etc]

All the same, for the near term – the opco’s could possibly still go with flat rate over GPRS – I do not know how congested the opco’s 2G spectrum and radio infrastruture really is these days and this may be a more a case of corporate inertia (one of the cad reasons referred to above !).

Fundamentally the GPRS part of 2G radio is quite similar to HSDPA in so far as it is a shared bearer – a bit like ethernet in the sky ! It is however a lot less efficient and a lot less responsive.

One final point – with the advent of Skype and its peers (!) – a flat rate package presents some risk to opco’s revenue streams – I personally believe they have a right to claim revenue for voice calls on their network made regardless of the way it is done – though there are many who do not. I don’t believe that GPRS is sufficient a bearer to support Skype services to any acceptable level but 3G may be a different matter – if not today then when HSDPA arrives. Ultimately I am not yet convinced that Skype’s voice codec’s are as good as the 3GPP defined ones (EFR, AMR etc.) at handling efficient voice transmission over a radio interface)

[Codec - a software that converts voice to and from a digitial stream, including compressing the volume of data generated and handling errors and delays in the digital tranmission.]

[3GPP - the standards organisation that created the GSM and UMTS specification and EFR and AMR are codecs used by those standards.]

On a slightly different topic one thing I’d like to see happen is a move towards making an ‘always-on’ service available to users, perhaps at a premium. This is where the handset/device makes a permanent connection to the network instead of establishing a connection whenever the user is browsing and taking it down when they have finished (or having it taken down at the network level after a period of inactivity or just after a period of time). This would enormously improve the response time for those quick “I’ll just check the sports results” accesses – though not so much for long browsing/downloads type activities (which really require a better radio interface – EDGE for 2G or HSDPA for 3G).

regards

Jon Crooks

and secondly from Tony Fish

An interesting topic.

The operator dilemma

The current situation is that the mobile operators in mature voice and text markets are pricing to win customers and increase volume on built infrastructure with a net effect causing ARPU to decline.

The shareholders still perceive mobile as a growth area and therefore provide through market forces a premium on a p/e based share value.

However with no more new users (>100% penetration) and declining income, the story moves to data, the great vision.

To increase data traffic the end user cost of data needs to fall, however there is not the same scalability as in voice. Therefore need to balance traffic and value, but with the pressure that they must grow to maintain the premium. Rock and hard place.

Scenario 1.

Operator provides unfettered wholesale data terms. VoIP services enter the market, compete with operator GSM Voice, operator marginalized to bit pipe. Not good

Scenario 2.

Operator provides controlled access to content company for wholesale data terms. Content companies not longer need Premium rate text to pay, can move to subscription basis. Operator losses out on high margin (25%) PSMS business. Decline in RPU and customers move to 100% off portal. Not good

Scenario 3.

Operator tries to be innovative, but cannot get head round it and people blog as annoyed. Current

Scenario 4.

Customer realizes that some tariff bundles give 1Mb down load for £0.30p. Operators realize they have wrong bundles in market, but flood gates open. Whilst no wholesale model, therefore operator maintain improved margin, a good solution for them as some growth in KPI’. Most likely

Scenario 5.

Operators given route to maintain control and increase data traffic (my new venture !)

Do I think they are wrong – no

Do I think they are right – no

Do I think they are confused – yes

Do I think that they are very worried about change – yes

Tony F