Mobiles aplenty but they're not ringing

Hands up all of you who don't have a cellphone. Both of you, see me after class.

Hands up all of you who don't have a cellphone. Both of you, see me after class.

IDC has just released a report looking at the New Zealand cellular market and it seems we're pretty much at saturation point. By 2008 around 82% of the population will have a phone and that will be that.

But there's a catch, of course. Here in New Zealand we all have the beasts but we don't use them terribly much. On top of that, most of those cellphones are on the prepay service rather than contract or post-pay. New Zealand has a higher percentage of prepay services than any other country IDC looked at (among them the UK, Hong Kong and Australia). Prepay customers, according to IDC, spend on average five times less than their post-pay counterparts.

Another analyst, Australian-based Paul Budde, earlier this month claimed that only 7% of New Zealand's phone calls go via the mobile networks, compared with more than 50% of calls in places like the US and Scandinavia. Even Australia has double New Zealand's rate of mobile usage with less market penetration.

So why is this? If we're all carrying the damned things, why aren't we using them?

There have to be two reasons. First, local calls on land lines are free, and it's hard to compete with a free service. They're not really free, of course; you pay your $40 a month to Telecom for the privilege of as many local calls as you want. Also "local" varies from place to place. I have a free local calling area of at least half a million people; your mileage may vary. Cellphone companies offer contract deals that give users so many free minutes each month, but when you're offering 100 minutes versus unlimited minutes it starts to look a bit silly.

Then, of course, there are the call termination charges that TUANZ has been so vocal about. These are the charges the phone companies slap on each other for terminating calls on their networks. It's said they're artificially high and kept that way so as to keep the cash flowing between the two. A US Trade Representatives Office report that came out this month lambasts New Zealand and several other countries, including Australia, China and Korea, for having high termination charges. However, as Vodafone tells me, the Americans aren't comparing apples with apples. Over there, you pay to receive a call, meaning the network providers get half their money from a source that's simply not available to operators in the rest of the world. Of course New Zealand and Australian termination charges look high -- they're double what the Americans charge.

Telecom argues that neither its mobile division nor Vodafone have yet made a huge return on their enormous investments in New Zealand and that, despite finally being profitable, it'll be years before that happens. So for unbundling, Telecom argues competition between networks is the only way forward.

All of which makes it fascinating to see what happens when the third-generation networks on the drawing board become reality. Vodafone is close to signing a partner to build its 3G network and TelstraClear is also talking about building one. But does the country need three new cellphone networks when we don't make much use of the ones we've got?

Brislen is Computerworld Online'sreporter. Send letters for publication in Computerworld to Computerworld Letters.

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