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Network under-provisioning starting to catch up with telcos

January 11, 2011

You get what you pay for. It’s an old cliché but has probably never been truer especially when applied to telecommunications products.

In a bid to grab market share quickly some ISPs and phone companies have either dramatically dropped their prices or started offering so called “unlimited” deals. Anyone even remotely familiar with the basic principles of supply and demand knows there’s no such thing as unlimited (unless ofcourse you are referring to the greed of large phone companies).

While it may initially look good for consumers, it’s clear something has to give. Wholesale telecommunications costs have stayed relatively stable over the past year or so, while retail prices have either fallen dramatically or have become “unlimited”.

The result has been extremely slow Internet browsing speeds, dropped calls, poor voice quality and network failures.

In most industries this would be called a drop in standards, however in telecommunications it is known as network under-provisioning. Basically it’s the telco equivalent of watering down your drinks.

Several cases of network under-provisioning have been reported and there is significant consumer backlash and ongoing investigations by the ACCC.

The case of Vodafone’s “infinite” plans has even led angry customers to set up a website called Vodafail.

What might have seemed a good idea to the marketing folks within these telcos has lead to costly litigation and a sour taste in the mouth of customers who believed the hype.

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