Shoot the Statistician, cries Vodafone

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Posted Sun 14 December 2008 @ 3:28 p.m. by Ernie Newman

Another quarter, another Commerce Commission Quarterly Monitoring Report, and another angry statement from Vodafone!

Once again the legitimacy of including the contentious Vodafone "Base Plans" in Commerce Commission/OECD/Telegen benchmarking statistics is under debate. The Commission has again chosen to exclude these from the range of plans it measures and Vodafone is crying foul. Without "Base" we are among the half dozen dearest countries in the OECD in which to run a cell phone; if they were included we would look better.

So what's the key issue?

The Commission states (para 24):

"The Commission has not benchmarked the results for Vodafone’s three Base plans for some time because it had concerns over their accessibility. In June 2008, Vodafone made changes to its website to allow customers to be able to subscribe to the Base plans over the internet without having to visit a retail outlet. The changes effectively made the Base plans ‘internet only’ plans. When Teligen became aware of this fact it informed the Commission and Vodafone that it intended to exclude the Base plans from future benchmarking as it did not knowingly benchmark internet only plans. In response, Vodafone made the plans available in store again in the September quarter. However, the plans are still not promoted or listed in store displays. Furthermore, the Commission understands that while some commission is paid for their sale, it is less than for other Vodafone plans. The plans appear to be constructed so as to optimise Vodafone performance plan performance under the OECD mobile baskets. (Emphasis added by TUANZ.) Accordingly, the plans have a high charge of 99 cents per minute for any minutes in excess of each plan’s quota of national minutes and all international calls cost $1.99 per minute.”

Effectively the Commission is accusing Vodafone of putting these plans on the market with the express intent of complying with the OECD survey criteria.

Last Friday on an impulse, after seeing the ComCom release but before knowing Vodafone's reaction, I dropped into a Vodafone store on Lambton Quay and asked for information on the Base plans. I was told that there was no printed material available (nor was there on any other plans) but the Base plans were "very basic, a 2 year minimum contract period, no handset subsidies, and very expensive if you go over your call minute limit.” The tone was dismissive – the clear message was that I would need rocks in my head to buy one. This is consistent with the difficulty the Commission’s own mystery shoppers have had in enquiring about these plans in the past.

Is it legitimate to include such a plan in the benchmark statistics? I think not

Benchmarking is about what customers actually pay, not about what in theory they might. Vodafone could clarify this by telling the Commission how many subscribers are on “Base” but has previously declined to do so

My guess is that customers, like Vodafone’s own sales people, have rejected “Base” out of hand because of the draconian conditions. If so, it has no place in the international benchmarks.

So in my books the Commission has exercised its impartial professional judgement wisely and made the right call.

If Vodafone wants to see New Zealand look better in the world rankings it should offer a cheaper plan that genuinely meets the needs of the market, without show-stopper conditions, and which its own staff will not be hesitant to sell. Constructing a plan specifically to make the statistics look good as the Commission has implied, if it is true, deludes nobody.

Categories: TUANZ policy | Wireless carriers

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3 comments

  • Paul Brislen says:

    The Commerce Commission is not comparing apples with apples. The OECD has looked at the Vodafone plans alongside the other plans available around the world and USING THE SAME CRITERIA in each case, has decided the Base plans are valid, are valuable and are in the top half of the OECD. The Commerce Commission has introduced rule change after rule change to continually dismiss these plans. It is setting a different standard for NZ plans when compared with the rest of the developed world and that's my single biggest problem with all of this - the constantly moving and often hidden target. Every change the CC has asked for has been included in the Base plans. Every single one. Yet still they find a reason to exclude them. Ernie, the reason the sales staff don't sell the Base plans over and above all the other plans is that there are better plans on offer - plans that include Best Mate and Family and which deliver tremendous value. The OECD has decided not to include BM and Family in its assessments because of the difficulty comparing such things. If they were included I'm sure Vodafone's plans would be even higher in the rankings. Sales guys being sales guys they always try to upsell customers. It's the 'would you like fries with that' approach to selling.

    Added: 15 December 2008, 2:21 p.m. Flag as Spam  |  Flag as Offensive

  • Ernie Newman says:

    Paul, surely if the ComCom believes it has better information about the NZ scene than the OECD, it is entitled to take that into account as long as it does so with transparency. We both seem to agree that only a few customers are on the Base plans. The difference is why. I say (and the Commission seems to agree) that its because of show-stoppers in the small print. You say its because you employ great sales people who talk the customers up. But does it matter - surely benchmarking is about what people in a market actually pay, not about what a cheapskate could theoretically pay. Benchmarking is an imperfect science, I think we all aknowledge that and should have pity on the people at the ComCom who grapple with this. I still believe the Commission is right to base its work on the cheapest plan that has a meaningful number of customers, and to exclude any plan where there is evidence that it has little customer support.

    Added: 15 December 2008, 4:30 p.m. Flag as Spam  |  Flag as Offensive

  • Paul Brislen says:

    You've hit it on the head, Ernie. Transparency. There hasn't been any. If the ComCom had said up front "do this to make the plans OK by us" we would have done that. Indeed, we thought we had! What the ComCom is doing by excluding the plans is comparing our second cheapest plans against the cheapest plans in other countries. We have seen no evidence the Commission has data on the number of customers on these overseas plans or the commission rates paid to sales staff or the price if you fall out of the bundle. Benchmarking doesn't measure the price actually paid - it measures the price of a fixed basket of usage across all the tariffs available. So, transparency and fairness for ALL concerned would be what we're after. Cheers, Paul.

    Added: 15 December 2008, 6:04 p.m. Flag as Spam  |  Flag as Offensive
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