What are the fixed and variable costs incurred by cos to provide call/txt message?

S

samanthajane

Registered User
Messages
766
Not taking into account any outgoings that a phone company has, like equipment or staff, what does it actually cost the company for you to make a call?
 
Last edited by a moderator:
Re: What the actual cost of making a call/txt message?

You'd need to have a look at the regulated accounts (not the statutory). These are available on eircom's website for eircom.
 
Re: What's the actual cost of making a call/txt message?

Sorry i didn't word that properly.

I cant word it in a way that makes sense so i'll use an example.

When you buy a sandwich in a shop. You pay say 3.50, the cost of that sandwich to the shop is the bread, butter, and filling. They have to mark up the price to make a profit to pay staff, taxes, rent ect ect. But they had to buy those products in first.

I know lines, masks and everything has to be there for the phone to work in the first place, but does it actually cost ( we'll say eircom ) any money when you actually make a call.
 
Re: What's the actual cost of making a call/txt message?

I'm no expert but these are three major costs that would spring to mind immediately

Infrastructure
Staff
Maintenance

Then allow for insurance, advertising, sponsorship, etc and they would have fairly major outgoings.

They probably make a minute amount on any one phonecall or text but the volume is huge thereby giving a large profit.
 
Re: What's the actual cost of making a call/txt message?

So taking all those expenses out and when the mask, lines equipement ect is all there there is no cost to them when you make a call. It not like the lines need electric, gas, petrol anything like that to actually make the call go from one person to another. You pay for petrol for your car, but you need the petrol to make the car work, same with oil you need it for your heating to work. But you dont need anything to make a phone call work.

So in saying that why does it cost more to phone a mobile than a landline? Why can you call australia, canada and other countries for nothing ( if you have that package of course )

If it costs them nothing then the packages are just put together to try and attract people to going with them and not another company, that if you get "free" calls to one place they will make money from you when you call other places.
 
Re: What's the actual cost of making a call/txt message?

The infrastrucure involved is enormous. Its not as if they pay some guy to erect a mast in the morning and never have to look at it again. The cost is spread out over a period of time which, presumably, is factored into their pricing. They are also continually upgrading their networks, maintaining them, etc. There are also a lot of staff dealing with customers both by phone and in the shops that have to be paid for. I'm sure that's only tip of the iceberg. My sister works in communications-related IT and the figures that she deals with are huge even before any structural work takes place.

I'm not defending them but you seem to want to simplify it too much. The reason they make so much profit is probably due to the volume of calls and texts we, as a nation, make.
 
Re: What's the actual cost of making a call/txt message?

Yes thats what i wanted to simplify it down to the basic.

I'm not bother about what profit they make i was just curious as to if it costs them anything for someone to actually make a call.

I did start by saying not taking into account any outgoings.
 
Re: What's the actual cost of making a call/txt message?

samanthajane said:
It not like the lines need electric, gas, petrol anything like that to actually make the call go from one person to another.
Click to expand...

Ah, you do realise that it takes a lot of pretty sophisticated electronic equipment to make all this work??? Usually rooms full of the stuff, burning so much electricity they require heavy AC/ventilation systems.

And yes, phone lines do require electricity to operate.
Leo
 
Re: What's the actual cost of making a call/txt message?

i didn't know that. But i do now...thanks.

Thats all i needed to know. Just had it wondering around in my head, one of those things where you wont rest till you find it out.
 
Re: What's the actual cost of making a call/txt message?

I have been told before that it costs the phone companies nothing at all for customers to send text messages but they still charge 12c per text in some cases.
 
Re: What's the actual cost of making a call/txt message?

RonanC said:
I have been told before that it costs the phone companies nothing at all for customers to send text messages but they still charge 12c per text in some cases.
Click to expand...

What do you mean?

If I understand you correctly, I don't think it's at all unusual.

E.g., we provide a service which is costed partially on the basis of the specialist equipment we use which was very expensive to buy but as it happens, relatively low cost to maintain. It has been paid for many, many times over at this stage and although the service is not high cost to the customer it is very profitable for us at this stage.

But none of that means we are going to reduce our already competitive prices.

But maybe I've misinterpreted what you are saying.
 
Re: What's the actual cost of making a call/txt message?

The marginal or extra cost of an SMS is approaching NIL.


Similarly, the marginal or extra cost of a 1 min call to Cork is very low, under 1c per min??


Under pure competition, price equals marginal cost, so eventually price should fall further.
 
Re: What are the fixed and variable costs incurred by cos to provide call/txt message

Any calls made from one operator to another (e.g. eircom to Vodafone) will incur interconnect charges. Eircom are charging their customer to make the call, but they have to hand over a portion of the revenue to Vodafone (as the call used the Vodafone network too). This is why it's generally cheaper to call customers on the same network. So yes, other than staff costs, infrastructure etc., there are charges incurred for individual calls (and SMS).
 
Re: What are the fixed and variable costs incurred by cos to provide call/txt message

You seem to know a bit about it so i'll ask you other questions i have.

So why does it cost more to call during the day that the evening. Most people would have their tarriffs set up to make cheaper evening calls. But since you can change that and avail of the same during the day it wouldn't actually cost them more to do that.

So to call during the day from 02 to vodaphone is for instance 60c a min. Is 02 charging more because they can or does vodaphone want more per min for using their connection during those times?

And how the hell is tesco making any money? You buy €15 of credit and you get €45. Sounds great am thinking of switching myself but i'm sure there has to be a catch somewhere that i dont see or just cant understand the terms and conditions properly.

I'm on the 02 network anyway which is who they are using so i shouldn't get worst connection. Not like how it was when meteor first set all. All those adds saying they had 80% coverage and then 90% coverage. Must just of been my bad luck i wa always in the area that didn't get coverage, even when they were at 99% coverage!!

So will tesco eventually have their own masks and stop this deal and will hope that everyone that has moved will just stay with them.
 
Re: What are the fixed and variable costs incurred by cos to provide call/txt message

samanthajane said:
You seem to know a bit about it so i'll ask you other questions i have.

So why does it cost more to call during the day that the evening. Most people would have their tarriffs set up to make cheaper evening calls. But since you can change that and avail of the same during the day it wouldn't actually cost them more to do that.
Click to expand...

Peak traffic times are during the day (especially on fixed line networks due to business calls), and there have always been different peak and off-peak rates (operators try to entice people to use the network at times when it is not so busy). Similarly, operators charge other operators different amounts for peak and off peak interconnect. If you can change your account to have the same cost all of the time, chances are that this rate falls between the peak/off peak rates.

samanthajane said:
And how the hell is tesco making any money? You buy €15 of credit and you get €45.
Click to expand...

Tesco are paying O2 a wholesale rate for the total minutes used. As long as Tesco charge its customers more than the wholesale rate, they will make money. They are actively trying to get customers on board at the moment, so offers like that above are probably for a limited period (although they will probably still be good value without these offers). Tesco will never have their own network - that's not what they do. They will always be piggy backing on someone elses network.
 
Re: What are the fixed and variable costs incurred by cos to provide call/txt message

Telecoms firms want to charge firms more, so higher rates during the day.

This is known as price discrimination - very common.

Same goes for airlines, hotels, restaurants, etc.
 
You must log in or register to reply here.
Back
Top