Category Archives: communication

Who do you trust more than your bank?

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Turns out Australian banks are concerned that their customers have greater confidence and trust in Google and PayPal than in their own institutions.

It wasn’t that long ago that financial institutions needed marble-clad offices and multi-decade histories to show that they were serious and were financially stable and could be trusted. Now the organisations that generate trust are barely a decade old and interact with customers in a purely virtual form.

“If Google got up and said we are going to offer a savings account, for me, that would be very difficult and confronting,”

I already use and love Google Checkout, which allows me to purchase items quickly from a variety of sites without having to enter (or share!) my credit card information with the new merchant. I honestly wish all merchants supported it.

PayPal has had a difficult history in South Africa, given that only very recently have we been able to withdraw funds from PayPal (and only via FNB even now). Still, I trust them more than most merchants.

One reason I might be concerned about Google as a bank is that since it would be so internationally successful, it would be an insanely attractive target for hackers. The number of attack vectors that would be pointed its way would be particularly concerning. (Yes, I’m writing this from a virtually virus-immune Mac for similar reasons.)

All companies must focus on trust and genuine relationships with clients, but no more so than financial services companies.

The Power of Misconceptions

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In broad terms, we are all mostly ignorant. Worse than ignorant, we have notions and views, firmly held, that are entirely incorrect.

We only complain about what we don’t like

Nobody complains to their boss that they are overpaid. Nobody complains that their pension or social security increases were above inflation last year.

We don’t understand the size of countries and continents

Africa is huge. More of an issue for Europeans and Americans, but the problematic views of the size of Africa due to mapping “projections” used to represent an almost-sphere onto a flat map are almost universally held.

A map showing the real size of Africa as measured in square meters of surface area compared to other countries

The Real Size of Africa

We don’t understand our economy (or at least US students surveyed don’t understand their economy)

Bill Goffe surveyed his students [pdf] with worrying results:

  1. Students assumed 35% of workers earn minimum wage compared to the 2007 actual statistic of 2.7%
  2. Students thought recent US inflation was around 11%, when the real answer is basically 0. (and google is apparently planning some sort of price index of their own)

Plenty more where those came from.

Then a few previous posts of mine highlighting these problems

Estimating the ERP is hard, but the range of common flaws is astounding.

We like to complain about electricity prices, when we haven’t figured out that we pay for it all anyway.

Unemployment, mystified

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Shocking unemployment statistics (but what do they mean?)

Someone threw a shocking figure at me today. They said that the unemployed under age 35 in South Africa comprise 75% of the unemployed population. I believe the figure comes from Adcorp.

Like many statistics that are bandied around for shock value, this one is more fluff than substance. Here’s why.

The real view of the numbers

Here’s the data from the 2007 community service.

2007 Community Survey Results
Age Population Unemployed Unemployment rate % of population % of unemployed
15-35 18,323,677 4,310,474 24% 59% 71%
36-65 12,712,484 1,737,827 14% 41% 29%
total 31,036,161 6,048,301 19% 100% 100%
2007 Community Survey Results
Age Population Unemployed Unemployment rate % of population % of unemployed
15-35 18,323,677 4,310,474 24% 59% 71%
36-65 12,712,484 1,737,827 14% 41% 29%
total 31,036,161 6,048,301 19% 100% 100%
The first thing to note is that overall, the unemployment rate is exceptionally high – this post doesn’t refute that. High, structural unemployment is possibly the most serious problem our economy faces. Continue reading →

Paid how much?

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The ongoing public sector strike has raised several interesting points.

Not least of which is what teachers actually earn. A full-page advert in newspapers last weekend gave some very respectable figures  for teacher salaries.  A teacher just starting out, with a 4 year qualification has a total cost to employer of around R229,000 per year. This includes 13th check, pension, medical aid and housing allowance, but is a surprisingly high number. It also included the then-proposed 7% increase (versus CPI at 3.7% at the moment).

The offer was increased to 7.5% since the original advert, but the numbers below are the unadjusted numbers in the advert. These are annual basic packages excluding benefits. (It’s unclear whether the before Total Cost to Employer columns include or exclude the 13th check, which is definitely included in the TCE column).


 Year
Experience 2007 2008 2009 2010 TCE 2010
1 year 107,007 129,948 150,105 160,614 229,790
5 years 111,357 131,256 153,129 163,851 233,718
10 years 117,042 135,228 160,920 172,185 243,830
20 years 136,923 158,568 194,421 208,032 287,324
30 years 151,257 175,152 220,278 235,698 320,892

This advert prompted an immediate outcry from teachers writing to complain that they earn nothing close to that figure. This was followed up by government affirming that the figures are correct, noting that many teachers may not add up all the non-cash benefits. Continue reading →

Not growing up

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The New York Times has a fascinating article about “Why are so many people in their 20s taking so long to grow up?“. It deals with the broader issue of how and when young adults move through phases of adulthood and how this has changed over the last 40 years.

It’s based on US research, so the parallel to South Africa isn’t perfect. On the other hand, it may prove predictive for our population.

A few snippets (it’s a long article, but well worth reading the whole thing):

  1. The median age at first marriage in the early 1970s was 21 for women and 23 for men; by 2009 it had climbed to 26 for women and 28 for men
  2. Definitions of adulthood vary widely – people can vote at 18, but in some states they don’t age out of foster care until 21. They can join the military at 18, but they can’t drink until 21. They can drive at 16, but they can’t rent a car until 25 without some hefty surcharges. If they are full-time students, the Internal Revenue Service considers them dependents until 24; those without health insurance will soon be able to stay on their parents’ plans even if they’re not in school until age 26, or up to 30 in some states.
  3. Definitions of adulthood are clearly not just a function of age. (and so our marketing to them should consider more subtle measures than simply age ~ David Kirk) Continue reading →

More on cars and colour

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In researching my previous post on accurately measuring the risks associated with vehicle crimes based  on colour, I stumbled across another colour related risk measure.

Red cars, supposedly, attract more than their fair share of traffic fines.

Turns out this is incorrect.  Snopes.com has (as usual) an excellent article on red cars, including references to research showing red cars are not more likely to be fined than other vehicles. Unfortunately, the underlying research isn’t available online (as far as I could find).

Uncapped Wordsmiths

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There have been major developments in the broadband internet space in South Africa in 2010. Several major ISPs have started offering so-called “uncapped broadband” at surprisingly affordable rates.

The immediate astonishment and disbelief at the low prices was soon replaced by sulking and disbelief at the application of “fair usage policies” that restricts the speed at which certain ports run, and the speed at which the entire service runs after a certain (sometimes specified sometimes not) amount of data has been downloaded for the month.

I blogged a few weeks ago about the fundamental economic problems of shared, uncapped (or “common”) broadband access. This hasn’t changed the conversations happening in the wider world.  Maybe next time.

I thought I’d approach this from a completely different angle. Moneyweb has an article today “Is MTN’s uncapped broadband a con?” In reality, the article is taking a fair swing at most so-called cheap uncapped broadband, claiming that it isn’t really uncapped.

Which is ridiculous.

Of course it’s uncapped. You are never capped. You can download throughout the month and never be capped. The complainers are whinging about the wrong word.

What these services are not is broadband. They are uncapped, but the speed at which they are uncapped is too slow to be called broadband. MTN’s product could better be described as 128kbps uncapped, with a speed boost for the first 3GB (or 10GB depending on package). This is an uncapped account but it is not broadband.

The ASA has already had success in the past in preventing some companies from advertising internet services as broadband if they are not fast enough. This should be the angle taken to prevent misleading advertising.

Interconnecting confusion

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Interconnect fees and the reasons for their reduction are possibly the most misunderstood “big” news story over the last twelve months.

The hype and hoopla around this topic is fueled by our feelings as consumers of being charged too much big big monopoly companies. So I should start by saying that I’m not saying that we are paying too much. I’m not saying that because I don’t know enough about the costs of providing cellular services in South Africa. Maybe we are, maybe we’re not. Also, I’m not saying there aren’t monopolistic practices in the market – again I simply don’t know. Given the other stories torn from inside companies by the sharp teeth and salivating jaws of the Competition Commission, it’s understandable that many suspect consumer-unfriendly play by most large South African companies, particularly those in industries with a small number of players.

What I am saying is that most of what you read in the news about interconnect is horribly misguided.

The biggest misconception is that interconnect fees are an expense for cellular providers, and that the removal of this expense would allow them to reduce tariffs to consumers. Well, it is an expense, but it is also a source of revenue. Every time one company pays an interconnect fee, another company is receiving it.

Interconnect does not change the total amount of profit within the cellular industry. It may redistribute it a little, and there may be negative medium term competitive implications arising from interconnect, but lower interconnect won’t automatically increase profits that could allow competitive price lowering for the benefit of consumers.

TechCentral has an interesting article: Bain warns consumers not to expect cellular price cuts.  Of course, it also include some done-to-death flawed statements (whether from Bain or inserted by the zealous staff writer) such as:

Because new players have few customers at first, most calls on their networks will be to networks of other operators. High interconnection fees make it difficult for them to enter the market.

It’s not that this statement is incorrect (it is in fact correct) it’s just that it is horribly misleading because it only presents one side of the story. I’ve reworded it to provide the stunning insight: Continue reading →