OT - Cellphone billing

[James Knott]

Christopher Browne wrote:
> On Thu, Feb 28, 2008 at 10:28 PM, James Knott <james.knott-bJEeYj9oJeDQT0dZR+AlfA at public.gmane.org> wrote:
>   
>> Lennart Sorensen wrote:
>>  > On Thu, Feb 28, 2008 at 10:37:43AM -0500, William Muriithi wrote:
>>  >
>>  >> This is what I have found in any other country I have visited beside N
>>  >> America.  Communication cost can get really low as just paying the
>>  >> minimum fee to retain the number active. And as long as you have some
>>  >> money on the phone, the numer is your for an year.
>>  >>
>>  >
>>  > Here it can cost $5 per month to have voice mail service.  There it is
>>  > included free in your anual minimum use cost.  Of course voicemail
>>  > really costs the company nothing if they already have the equipment so
>>  > the $5 per month is pure profit.
>>
>>  Why would they already have that equipment?  A company buys equipment
>>  with the idea of generating revenue with it and that same equipment has
>>  to be amortized over several years.  Where does the money to amortize it
>>  come from?
>>     
>
> A peculiar thing happened in the US over the last few years:  A whole
> bunch of companies went aggressively after cellular market dominance.
> And a bunch FAILED.  That's part of why Nortel has gone through near
> death throes - they sold equipment to these companies, and geared up
> for expansion based on that, only to see the companies die.  Cisco is
> suffering from the same thing, albeit to a lesser degree.
>
> At any rate, what happened after the business failures was that a
> whole pile of cellular infrastructure leaped onto the US market at
> fire sale prices.  A side-effect of this is that successors could buy
> up "world class" infrastructure for a song, and thereby have near-zero
> cost for this sort of thing.
>
> Canada did not see anything like the same sort of
> cut-throat-to-the-point-of-bleeding-out competition, so the cellular
> sellers, here, actually paid for the equipment that they are using.
> Mind you, eventually the cost is amortized, and some of the fees that
> they charge do become lies.
>   

Once that equipment is paid for & depreciated, it becomes a tax 
liability to keep it in service.  At least, that's what I recall from  
when I was planning equipment installs for Unitel.  Also, these days 
equipment depreciates fast!  Take Rogers, for example.  They originally 
started out with analog gear, then the old "TDMA" and now GSM (also 
TDMA) and they've already started  moving to the next generation.  On 
the other side, the carrier gear is quickly moving from TDM or ATM to IP 
switching.  So, that's 3 or 4 network builds in the about 20 years 
they've been in the cell phone business.


> But it is not irrational that some services wind up being near-free in
> the US, when the cost model for equipment wound up different due to
> bankruptcies...
>   


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