Telcell’s Brian Mingo weighs in on mobile phone tariffs – ‘No commitment, no good deal’

POSTED: 08/9/13 1:36 PM

Brian MingoSt. Maarten / By Jason Lista – “90% of our business is pre-paid,” Brian Mingo, chief commercial officer (COO) of the Telem Group said in his office at the Soualiga building yesterday. “If I can’t get a commitment from you, I can’t give you a better deal,” he said point blank. “The whole structure is based on that.” It’s the prepaid mobile phone rate on St. Maarten that is Telcell’s highest, at about 25 dollar cents per minute, compared to about 20 dollar cents at KPN, the largest mobile carrier in the Netherlands.

Mingo explained that, because of the transient nature of a large part of the island’s population, sometimes a phone number would be used for 3 or 4 months and then go dormant or inactive for quite some time. It creates an unreliable and inconsistent revenue stream, he elaborated.

“I always benchmark,” he said. “We are currently going through a rate exercise.” Mingo described how he looks at the rates and packages offered by the biggest carriers in the US and the Netherlands, and tries to remain competitive given local constraints. Prices are analyzed, given costs, and compared to “see if it fits in the budget of consumers.”

The discussion then shifted toward an international cross comparison of rates Today published on Tuesday about the relatively high prices of mobile rates in St. Maarten compared to the Netherlands and other EU countries like Latvia, whose consumers pay far less per minute for usage than either local or Dutch consumers.

“Mobile is a good indicator of quality of life,” drawing a parallel between the price of mobile rates and the standard of living in a given country. “The Netherlands has one of the best social structures in Europe.” That kind of social structure costs money to maintain, Mingo assured.

He then explained that because the Netherlands has such a high quality of life, it needed an extensive and relatively high tax system to support the public infrastructure that makes such a life so convenient. All this has to be paid for, which translates into higher mobile phone rates because companies have to offset this higher cost of doing business by charging more.

For example, the Dutch government recently put on public bid licenses for 4th Generation Long Term Evolution (4G LTE) mobile spectrum. Firms in the Dutch market had to fork over billions in Euros just to acquire them, prompting mobile giant KPN to even reduce its dividend forecast. Such expensive licenses are a way for The Hague to raise revenue, and this translates into higher mobile rates for consumers.

“Latvia doesn’t have the quality of life that the Netherlands has,” Mingo pointed out.  A country like Latvia, he continued, “would have dark spots” in its mobile coverage, areas where no signal can be had. It would lack the infrastructure a Dutch mobile company would have, he explained.

In contrast, the telecom regulator in the Netherlands ensures that any mobile carrier must guarantee nationwide coverage before it receives its license to operate. “Holland has significant after sales service,” he added, which goes into the pricing structure. In other words, you get what you pay for.

Asked about whether he thought European mobile providers receive subsidies, Mingo pondered for a moment, then said, “they do get their advantages” in the form of tax cuts, favorable loan arrangements, etc. According to him, such companies mostly receive these types of indirect benefits at the national level, not so much at the EU level. Large communications companies like Sony Ericsson of Sweden, for example, are major domestic players in the Swedish economy, employing a significant amount of people. “Sweden will not allow it to fail.”

The problem of matching up narrow national interests with a wider European vision was expressed by Neelie Kroes, vice president of the European Commission on the Digital Agenda, in a July speech. “Today our networks and regulations are largely national,” she said on the current state of the mobile network within the EU, which is why there are still such discrepancies in prices across the union.

“For truly European networks, it must be easier to communicate across borders. Without operators facing a tangle of different, incompatible rules,” Kroes continued. It’s a single market in theory, but in practice there are different rules, regulations, and standards among member states, making it difficult to harmonize prices.

Echoing Glen Carty of UTS, Mingo said Telcell gets financing in the private sector at commercial rates. He also repeated one of Carty’s complaints in Tuesday’s story. “We are competing with major carriers,” he said. Large French mobile carriers on St. Martin directly beam their signals from their towers on Pic Paradis to lucrative areas on the Dutch side, like the harbor and airport where the majority of tourists and French nationals arrive on the island. These tactics, while in violation of roaming agreements, cut into local telecom revenues.

“We have high utility bills too,” Mingo expressed. “We have to run the same equipment that larger countries are running but with smaller volumes.” This drives up costs per user, according to the COO. “St. Maarten is a small market.”

In order to get the benefits of cheaper rates, Mingo suggests post-paid plans. “Post-paid is about packages” and the user is not charged per minute the way pre-paid phone usage is.

At the end of the discussion, Mingo summed up what he believes are the 3 overriding factors that contribute to higher than average mobile rates on St. Maarten. 1. Post vs. pre-paid usage, and the challenges of unreliable post-paid use on revenue streams. 2. The higher costs of living on St. Maarten, ranging from fuel to food imports, which drive up the prices of goods and services, and 3. The higher than average regulatory fees that local telecom companies like Telcell and UTS have to pay to the industry’s regulatory body compared to the international average. A sentiment his colleague Glen Carty at UTS also expressed to this newspaper.

The troubling picture that has emerged from conversations with both Carty and Mingo is the invasion of foreign mobile signals from competing carriers across the border, and which are directly aimed at St. Maarten’s harbor and airport. It is an issue that deserves the attention of the local government if it wants to protect telecom revenues and, ultimately, local consumers.

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Comments (1)

 

  1. Telem pot paid user says:

    In my opinion Brian Mingo talks BS.
    As a postpaid user I commit myself to Telem.
    A pre-paid user gets USD 30 when he buys credit for USD 20. The pre-paid user gets 50% more!
    As a post-paid user I asked if I could get the 50% discount, too. I couldn’t, so commitment doesn’t pay out.
    That’s why Brian Mingo talks BS!