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NZ Telecommunications - Mobile

Mobile Overview

The mobile market in New Zealand reached saturation levels in 2007. Mobile data applications and content have been constrained through excessive pricing models by both Wireless network carriers - Vodafone NZ and Telecom New Zealand.

Rumours of a third wireless network being rolled out [reportedly from India] have yet to be released. This

Mobile Communications

New Zealand's current mobile market is a duopoly of Vodafone New Zealand and Telecom Mobile. By late 2006 the market was approaching saturation and mobile subscriber growth is predicted to begin tapering off significantly during 2007 and 2008, as broadband will take over as the key driver of growth in the telecommunications sector. This report contains a series of market analyses on a wide range of mobile topics both from a local as well an international perspective. As we reveal in this report, the mobile market in New Zealand has become one of the most confusing in the western world, thus requiring an extremely cautious approach from the regulator. Telecom's future mobile directions are still unclear and Vodafone is close to being seen as a monopoly in certain markets. Econet and TelstraClear, which are forever indicating their intentions, have so far failed to enter the market. A collection of market survey on the mobile sector is also provided.

Mobile Communications - Spectrum

The allocation and licensing of radio communications in New Zealand managed by the Ministry of Economic Development under the provisions of the Radiocommunications Act 1989.

Spectrum was initially sold under an auction tender system, begun in 1996.With new technologies impacting spectrum use and management, public spectrum use is reducing the need for hard-wired voice and data services to deliver various types of wireless services.

In 2005 Spectrum arrangements were made to accommodate Ultra-Wideband technology, a new wireless technology developed to transmit large amounts of data over very short distances.

In July 2006 the New Zealand Government released a discussion paper as part of its review of cellular rights in the 800/900MHz spectrum bands.

Mobile Data Services

2008 should be the year of mobile data, however hefty price plans are killing the adoption of mobile data services in New Zealand by both business users and the youth generation. Both these market groups are growing rapidly in other countries, where pricing is more competitive and affordable.

The knock on effect of lack of mobile data adoption is the lack of content and application providers. Consumers are terrified of mobile data charges in NZ, downloading a single news site home page can cost $8.60! Publishers have been burned with low customer adoption of mobile services so they no longer invest in mobile specific delivery.

The ridiculously expensive cost of mobile data holds the whole industry up, for carriers, publishers and creatives.

Data Content Development

Around 2003 - 2004 NZ was a hub of innovation for mobile data, with companies such as Hyperfactory, Txtstation and DataSquirt leading the market with innovative content. With the lack of support from the Telcos, all three companies are now operating largely outside NZ. The only company to remain locally focused is Run The Red [although they are also doing business in Brazil].

In spite of innovative marketing personnel attempting to forge solid relationships with mobile data application and service providers, the aggressive pricing models made doing business with the two Network providers uncommercial.

I would not expect any signficant change in the local mobile content development industry until the end of 2008, when the impact of Separation Day [March 31, 2008] may start trickling through the market.

Another significant change early 2008 is the impact forecast due to the Apple iPhone and Googles Android phone software. This is an indication of a shift in power from the carriers back to equipment and applications vendors. Expect a mass market impact in 2009.

The NZ market will continue to lag until:

1. Vodafone and Telecom support sustainable business models for mobile data providers. Between 60-90% of monthly fees needs to be invested in supporting value added applications.

2. The current fear over mobile data usage is reversed, with unlimited data plans. Even with fair play clauses preventing excessive use, an unlimited plan needs to hit the under $30 per month to be attractive to mass market.

Vodafone International SMS Pricing

Vodafone’s international text pricing has recently reviewed - but not with the customers in mind. The new pricing plans caused an explosion in the market:

Txt on the 'no cost to the carrier channel' has been raised from 20c to 80c.
Receiving a call is $1 per minute.
Making a call in Oz at peak is $1.45 per minute.
New opt in Traveller plans with 4 zones:
- Australia = NZ Standard Rate.
- UK = NZSR + $2 per minute
- North America and Asia = NZSR +$3 per minute
- ROW = NZSR + $5 per minute

Tension between the traditional carrier models and new IP based models will no doubt continue, with customers of the carriers dependent upon them. New Zealand does need strong carriers [and competition] to provide the platform for other industries.

Next: Convergence in NZ Telecommuncations

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