Cellphone number portability is a key feature of the agreement between Telstra and Bell South.
After months of speculation, the companies announced last week that Bell South will provide access and time on its mobile network to Telstra, allowing Telstra to offer mobile services using the Bell South GSM digital network.
Contrary to some expectations, the deal won’t result in a price war, says Telstra managing director Peter Williamson.
Telstra will launch its mobile service early in the first quarter of next year.
The deal also results in Bell South acquiring Telstra’s licence for a section of the mobile frequency spectrum, adding further capacity to the Bell South network. Bell South wouldn’t say how much the acquisition cost. Industry sources said earlier this year that the deal was being delayed because Telstra was asking several million dollars more than Bell South was prepared to pay.
Telstra had said it would have a mobile service running by Christmas 1996, and admitted earlier this year that it had had to “eat a bit of humble pie” over that prediction.
Williamson says he is not expecting anything more aggressive than is already seen in the market with respect to pricing.
“Telstra’s position is that we’re a premium supplier. We try to add value before we add a price war to the marketplace.”
While Telecom says it welcomes the agreement as proof that there is competition in the New Zealand market, there is little doubt in the minds of industry commentators that Telecom will take the threat to its corporate business seriously, and some serious discounts will become available as a result.
Williamson says it wouldn’t have made sense for anybody, including the customers, for Telstra to build a third network in New Zealand. “That would have only kept the prices up.”
Bell South managing director Larry Carter says the relationship is “very pro-competition in the market”.
“We are wholesaling capacity to Telstra, which owns the full rights in how to package it and shape it for the customers they’re selling to. They’re not just reselling our price packages.”
Telstra is targeting the corporate market. Carter says that for the past year roughly half of Bell South’s customers have come from the consumer market, an area he expects to keep growing. “There will be some overlap.”
Says Williamson: “This is the final piece in the jigsaw puzzle in respect to our always-stated target market of multinational corporations and corporate customers here in New Zealand, particularly those with an Australian or Asia-Pacific focus,” says Williamson.
Grant Forsyth of TUANZ says the deal is of major significance. “This is the first time in New Zealand that a provider has negotiated wholesale access to a provider.” Forsyth is watching with interest to see whether there will be much difference in call costs as a result of the deal.
“In the past, mobile access has been structured around TASPS, whereby call costs were resold at Telecom’s rate plan, so there was never much of a difference between competing costs. This agreement gives the ability to offer some innovative products.”