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Tech Talk Radio Show 44 of 2009
Transmission date: November 2, 2009

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Ep 44: Adam looks at eBooks and digital readers like Amazon's Kindle. Telstra says there’s cheaper broadband on the way, Like South Africa, Australian pigeons are much faster than the local internet speeds, and Channel 72 is here, but what of the ABC’s new kids channel ABC 3?

November 2 , 2009

Technology is supposed to make our lives easier and on the whole it has, we now have the technology and gadgets to keep us in touch and in control wherever we may be on the planet. The problem in today’s modern connected world is which company to choose to allow us to connect. Today we buy a computer, pda, netbook, laptop, or mobile phone and it’s ours to own and to do with what wee wish - a common sense approach to consumerism, but what good is a device like this if it can’t be on line? 

It’s at this point that most consumers glaze over and head off into the great unknown with the sole intention of becoming connected but at the same time not getting ripped off by telecommunications providers. Before the internet and mobile phones came along, getting a phone company to connect you to the local telephone exchange was easy. You paid line rental, and 20 odd cents per local call, and a timed call for long distance. That was it - simple and easy to understand.   Today, such simplicity has long gone. Caps, bundles, shaping and contracts are now a part of buying our telecommunications requirements, and all are responsible for eroding the true value of what we’re paying for.

Imagine going into your favourite butcher and asking for a kilo of sausages, but instead of being asked for $7.99, being told that your now on a cap, and for $49 a month, you could get up to $350 worth of meat, but as soon as you exceeded the $350 cap, you were slugged a couple of hundred bucks a kilo for your excess consumption. Man, what a deal!

It’s ridiculous, just ask any butcher, but that’s what we all do when it comes to buying our telephony and broadband offerings from ISPs and Telcos. Instead of buying buy the kilo, we buy by the Megabyte. So why is it so?

This type of packaging erodes the value of the product being purchased, and the longer we buy it, the longer we think we’re getting value for money. The wholesale price of telecommunications is ridiculously cheap compare to that of a decade or so ago. We can get so much more up the same piece of copper or fibre than we could back then, so for telcos to slowly erase the per call or per Megabyte cost into a bundle or cap and hide it from the consumer is a stroke of genius on their behalf, giving them the ability to fatten their bottom line and pay their executives salaries that could remove poverty for some small developing counties.

Let’s do the maths, keeping in mind the telcos are not in the business of going broke. Take one of 3’s $49 caps. From the three website you get $590 worth of call value AND a handset thrown in for zero dollars for the $49 investment. Sounds pretty good doesn’t it. Oh, it’s not free, just zero dollars. What’s the difference? Well free infers that it’s not costing you anything, so obviously it is costing you something, just the marketing guy’s can get away with $0 where as the can’t with free. Now looking at 3’s rate card, their call cost is 35c per 30 seconds obviously 70c per minute which means $590 equals 842 minutes of talk time which their offering to you for $49.  Divide 842 by 49 and the call rate is 6 cents per minute. Add to this your handset repayments and they’re reaping 4 or 5 cents per minute of your hard earned cash and no doubt still making a good profit. Food for thought eh?

Next time you sign up for a mobile contract, ask them if you can buy the phone outright and then get a call rate of say 4 or 5 cents per 30 seconds. So in the utopian world of buying data by the Megabyte it makes good sense. Doesn’t it?

 This week on TTR

  • Adam looks at eBooks and digital readers
    According to Telstra, there’s cheaper broadband on the way,
  • Like South Africa, Australian pigeons are much faster than the local internet speeds,
  • CSIRO wifi developer John O’Sullivan wins the Prime Ministers  science prize, and
  • Channel 72 is here, but what of the ABC’s new kids channel ABC 3?