In an interview last week, the Jordanian minister of post and communications said that what is going on between MobileCom and Fastlink is the best example of what competition can provide to the citizen. And he was right on the dollar. Competition is bringing the cost of mobile telephony down, but which service costs the least?
Both players have come up with customer satisfying offers. However, their pricing mechanisms are confusing, even to someone with a basic knowledge of their pricing and markups. A consumer needs to shop and compare between the two firms. So how does one determine which service is most cost effective? To answer the question, I have asked myself, the following questions:
1) Which service is less expensive if I were a consumer of 300 minutes per month?
2) Which service is more cost effective if I were a consumer of 500 minutes per month?
3) Which service has the lowest price if I were a consumer of 1,000 minutes per month?
The answers to all three questions are calculated below using public data.
Note that beyond the package or per minute cost there is the cost of installation, and monthly subscription fee. To keep the calculation simple, we'll ignore the installation fee cost, a one-time fee, which MobileCom offers at 13 Jordanian dinars (JD) as opposed to Fastlink at JD15.
1) Which service is less expensive if I were a consumer of 300 minutes per month (10 minutes per day)?
Fastlink charges JD44 for 300 minutes per month through the Keep-Close plan. Under MobileCom's basic offer, the Kalimat plan, pricing is tiered rather than offered at a flat rate for the total 300 minutes.
Under Kalimat, 300 minutes per month cost JD17 plus two free hours (120 minutes), plus the next 180 minutes at JD0.13 for the first 60 minutes, JD0.12 a minute for the next 60 minutes, and JD0.11 per minute for the last 60 minutes. In other words, the cost of the last 180 minutes would be JD21.6, and the total cost of the 300 minutes under the Kalimat offer is JD38.6.
The flat rate offer for 300 minutes from MobileCom is the Club offer for only JD 35 per month, which is also less expensive than the Fastlink offer of 300 minutes. Thus, the Kalimat offer of MobileCom to a consumer of 300 minutes per month is cheaper than the Fastlink Stay-Close offer by JD5.4 per month or JD64.8 per year, and the Club offer is less by JD9 per month or JD108 per year.
Note that under the Kalimat plan, you are not charged for the total 300 minutes if you don't use them. Under the Fastlink Keep-Close and the MobileCom Club offer, you are charged the flat rate whether you use all of the 300 minutes or not.
2) Which service is more cost effective if I were a consumer of 500 minutes per month (17 minutes per day)?
For 500 minutes Fastlink charges JD82 per month through the Stay-Close offer. On the other hand, a consumer of 500 minutes per month could choose between the Kalimat or the Club offers of MobileCom and accrue savings.
Under the Kalimat offer the total cost is JD58.6 per month. Under the Club offer, the consumer pays JD46.2. In other words, the Kalimat and Club offers for 500 minutes per month are less than the Stay-Close offer of Fastlink by JD23.4 and JD35.8 per month, or JD280.8 and JD429.6 per year, respectively.
3) Which service has the lowest price if I were a consumer of 1,000 minutes per month (33.3 minutes per day)?
In the case of 1,000 minutes per month, the consumer pays a total of JD105 per month under the Fastlink Keep-Close plan, while under the Kalimat and Club offers of MobileCom, the consumer pays a total of JD108.6 and JD86.2, respectively.
In other words, a consumer of 1,000 minutes per day would pay less under the Club plan than under the Kalimat and the Keep-Close of Fastlink. The consumer pays JD18.8 less per month (JD225.6 per year) under the Club plan than under the Keep-Close plan.
So you would think the issue is settled; the MobileCom Club offer is better value. Not true! A few days ago, in a counter offer publicized a few days ago, Fastlink introduced the `Marhabtain' plan — “talk for one complete minute and the next minute is free for as long as you talk.”
One would guess that a discount occurs after the Keep-Close minutes are exhausted, which would change the cost structure to the consumer, and make the cost of a Fastlink call less expensive. But by how much? This is not clear.
Both companies will compete, not only in price, but also in quality and value added services. Offers will be countered by counter offers and the market shall remain supreme. Of this we can rest assured. Why?
Because the licenses of both firms stipulate stringent competition conditions that ensure that the rights of the consumer will not be undermined. Had there not been such clauses in both firms' licenses they would have had no incentive to compete, which is the case in many Jordanian industries, and would have simply opted to behave as a cartel and share the market at high prices. I
t's up to the Telecom Regulatory Commission to do its job of watching out for and protecting, not the competitors, but competition itself. — ( Jordan Times )
Yusuf Mansur
© 2000 Mena Report (www.menareport.com)
