Wednesday, June 07, 2006

A slight reduction in the high cost of living

One of the concerns surrounding the recent changes to SamoaTel's pricing model for landline telephony was the impact it might have on the affordability of Internet access. Compared to many other countries, Internet access is expensive enough as it is without having to pay an additional $0.04 + VAGST per minute. This increased cost is bad for the customer but also potentially quite bad for the businesses that provide Internet access. Increased prices can only lead to fewer customers and a decline in usage by those customers that remain.

It seems the three Internet service providers in Samoa have taken up this issue with SamoaTel and had a degree of success. Effective immediately calls made to special dialup numbers for the three ISPs will be charged at $0.01 + VAGST per minute only. It still makes for expensive Internet use but $0.67 per hour is much better than $2.70 per hour for the base call cost.

The quick change in position by SamoaTel does make me wonder. How much money does domestic telephony really cost them and how much of a profit are they making on it, that they can rapidly agree to the drop from $0.04/minute to $0.01/minute for Internet calls? Given the smoke and mirrors game they played when advertising the changes to their pricing model I doubt we can expect them to be a paragon of transparency and actually disclose that kind of information any time soon.

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