Up till now, I'm not sure what TS wants. Shorter contract? No contract?
Shorter contract, then pay more for phones. Accept higher tariffs. The certainty of $ to the telco is lower (correspondingly, "risk" is higher), so they will charge more.
No contract? PAYG is available already. Pay more for phones, accept higher tariffs. Sama sama. You do have a choice.
In SG.... all 3 teleco are from same branch... offer crappy services (mobile & internet & subscription TV), and bully us consumers....... We have no other options........
Art is perception; Perception is art.
I started the thread to learn the views of fellow CSers on long contract services offered by Telcos, as I suspect that it could be part of the cause for an environment where Telco offers little differentiation, slow innovation and average service quality. It is also not helpful for the consumers (e.g. have to wait to adopt new technology / devices or having to “endure” existing services etc.) as raised by some.
Of course, some will claim that there is a choice for not signing up a contract, but I invite you to take note on how they will make it very hard for you to resist their contract offerings e.g. through price or service discrimination etc.
During the discussion, it was interesting to learn and receive all kinds of feedbacks. Some of the points included legitimizing or normalizing on the use of contract for customer retention. Also, ideas such as profitability supersede values; innovation and growth potential were raised (which sounded a bit like Wall Street ☺). These while interesting, I can’t help but to disagree.
Personally, I hope that such “culture” would not develop into a norm or proliferate for reasons stated above. I would be damn when one day my favorite chicken store started offering me a free drumstick, if I formally agree to patronize him at least once a month over the next 2 years … kekeke … I mean I would like to visit the store because I enjoyed their food and services … and not because out of obligation
When they lock you in on a long period contract, it is an assured income stream for the telco.
We do not know what the telcos do with that assured income stream.
In certain industry, there is a common practice called factoring, once a certain company has bagged a big value contract.
They trade in this assured income stream / awarded contract and then borrow money from a finance / insurance company. They get cash up front.
Why do they want to do this? Sometimes when times are booming, they gamble on the stocks or property with the upfront cash and hope to reap more profits. Sometimes they invest in other high risk areas hoping to get extreme profits.
This is the norm for telcos everywhere, and started since as early as I can remember.. When I was in the UK, I didn't want to be locked down and didn't need a good phone, so I just took a PAYG plan, it was ok, I only spent 10 pounds a month on average I think.. Sometimes even less. I think I used more money on Skype to communicate with my loved ones back home.
I think your chicken rice store comparison isn't quite the same... It is more like your chicken rice store offers you a free chicken soft toy, and also reduced prices for your chicken rice if you commit to eating a certain number of times at the store. That happened for spas, if you recall.. Which caused a bit of a hoo-ha when they started closing down... I think nail salons are also starting to do that, hopefully the same won't happen. In any case, for these industries, customer reassurance is not there yet people will still happily sign up... So like it or not, people buy the rough idea.
In comparison, Starhub and Singtel and M1 are much less likely to go bust. Like I mentioned earlier, the creative pricing and plans will develop according to consumer demand, not the other way round. Believe me, if enough people get fed up and think that the two year plans are not what they want, you will see a change. I think you seem to be mixing two separate issues here - the pricing plans and the quality of service. In my honest opinion, as long as they upkeep a certain level of quality of service, then let the market dictate the pricing strategy. Cheers.
Maybe ... another possibility is about valuation of the firm e.g.
… present value could be calculated by discounting these projected cash flows -> higher valuation -> higher the stock prices -> lower borrowing cost -> increase option for gearing etc.
Perhaps those who run businesses or with great common sense here could provide details and further shed some light on this …
Last edited by keiser; 6th December 2012 at 01:58 PM.
A “norm”? Not in my mind …
I recalled signing up with a car polishing company at one point (which offered a free session if I sign up for 6) only to experience an excellent 1st demo session but had to endure the less than mediocre quality services for the remaining 5 sessions. Now, I am not saying that the Telcos are like that, but if they are confident over quality of the product and services, why worry that their paying customer from switching over to competitors – especially the players are offering more or less the same thing?
I believe the consumers here have continuously accepted changes … but if not careful … such ability to adapt might end up suppressing themselves … and also not helping the overall industry to improve or innovate in the longer term.
Last edited by keiser; 6th December 2012 at 06:26 PM.
Should telco contracts be capped at 2 years?
Fri, Jan 09, 2009
The Straits Times
The changes are therefore to 'promote effective competition' and give consumers 'greater choice...at competitive prices and quality'. Both consumers and the industry can give their feedback on the IDA's proposals until Jan 13.
Some one commented that Dell was not an IT company but was instead into trading stocks.
It generated cash flow and projected earnings from IT equipment orders, then played the stock market with the money for profit.
Likewise on a much smaller scale, in Singapore you can observe slimming salons, foot massage spas, massage centres, hair treatment clinics, etc.... all pestering their customers to sign the "package deal" for many treatments. You pay upfront.
They use this money to gamble on high risk ventures.
If they lose everything in the gamble, they give bad to worse service and eventually fold up and declare bankruptcy.
If they win in the gamble, they are feted by the local industry as the wonder boy or girl who made a fortune out of nothing.
Perhaps IDA should re-assess if capping below 2 years and even no contract will be more effective … Better still if IDA could restrict the Telco from distributing consumer devices, which then should motivate them focus on improvement and innovation for their core services … At this point it seems that IDA is still pretty lenient in them base on the recent article ….
Telcos fined $10,000 each for poor outdoor 3G coverage
a fresh idea on restricting telco from selling devices (and coupled with the no contract thingie). However, this may lead to higher subscription fees, given that there's no locked-in revenue now. service improvement and innovation may also result in higher capital investment in systems such as CRM, SAP blah blah (not to mention potential salary increase! gasp!). Similarly, equipment cost may now go up too, as the ah beng shops have monopoly over equipment now.
This forum is not simple ... So many experts from different fields !
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