IDC: 3G pricing too high - and XT may not save the day
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On the eve of Telecom’s XT pricing announcement this morning, International Data Corporation (IDC - the world's largest IT market researcher) is warning that New Zealand’s mobile data pricing is still very high by world standards, or even those of our cousins across the ditch - and that head-to-head 3G competition won’t necessarily lead to a mobile price war.
At 10am this morning (see UPDATE), Telecom is due to announce the final handset line-up for its new 3G network, plus the “structure” of XT’s pricing.
While Telecom and Vodafone are arguing over the speed and coverage of their 3G mobile networks, IDC researcher Rosalie Nelson says “in a price sensitive and recessionary environment, the cost of mobile broadband needs to come down with decent data caps if it is to really drive growth.”
Ms Nelson notes that in many countries, flat rate, all-you-can-eat 3G data plans, or pre-pay data plans, are common.
And even in Australia, where telcos share Telecom and Vodafone’s capped plan model, mobile data is much cheaper.
“In New Zealand, a 1GB monthly mobile broadband plan costs between $49.95 to $67.44 depending on the contract term,” says Ms Nelson. “In Australia you can get 1GB for $A19.95 ($NZ25) or 5GB for A$39.95 ($NZ51). Speed and coverage will not, of itself, be enough."
It seems logical that the launch of Telecom’s 3G network, on May 29, will spark more competition as the telco goes head-to-head with Vodafone’s 3G network, due to be completed on May 31.
However, Ms Nelson warns that, “We don't anticipate cut-throat pricing in New Zealand, as both Vodafone and Telecom will want to manage the growth in traffic and usage on their newly expanded network.”
Her comments echo those of Australian analyst Paul Budde, who also warned NBR that Telecom will not want too much load on XT too quickly, and will price its plans accordingly.
Ms Nelson adds a kicker: “Telecom in particular will want to minimise the risk of users substituting their fixed connection for mobile."
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Comments and questions13
If you're expecting Telecom to set the world on fire and be the white knight, I think you're in for a long wait.
It is nothing to do with managing growth. It is about gouging as much as possible out of the suckers that have no choice but to use these robber baron "services". The real issue is not the overpriced monthly charges. It is the fact that once you go over the data cap the telco's slash huge chunks of flesh out of their victims^H^H^H^H^H^H^Hcustomers by charging a minimum of 57c per megabyte. That equates to just under $600 per gigabyte!
don't use the service if it is overpriced! If people are dumb enough to pay for it, then i don't fell sorry for them. There are always alternatives to everything in life, and no-one died yet of "mobile internet access underuse syndrome"...
any other country would have a competition commission regulate these fees down. but no here in NZ the government is a nanny state for individuals but when it comes to treating consumers fairly it is all goms and no teeth. remember fellas monopolistic behavior is not 'free markets'
no problem must be a pig farmer or some other profession where keeping up with the rest of the world doesn't matter. have you looked at our gdp/capita? that's right -- we suck. we need competition. hows this for a slogan. NZ 4th least competitive place on earth only our athletes know how to compete. business people still act like lords and lepers
I love it how people always compare NZ with Australia or the UK... It seems to me to be an issue of size and economics more than creating a stranglehold on the market. We're much smaller than all these other countries we're always comparred to, it naturally costs more to provide services (or set up a network as the case may be). If it sounds so much better then move to Aussie or the UK. Get real, or get over it!
get real Get Real - a cell phone tower in NZ must cost Vodafone about the same as a cell phone tower in Aus or UK and each tower must serve about the same population base per $invested etc etc. I think the pricing is due to "Yield Management" - Telcom has no trouble sleeping at night with their pricing decisions so Vodafone join them. Economics has a name for it - Duopoly
Well then, we'll just have to see how 2 degrees' shakes things up then aye Paul?
Or you can always move to Aussie...
People are constantly crying about the price of things - no one is every happy.
If it was free, people would still complain.
The idiocy of the argument is in comparing New Zealand to Europe, or the USA, or even Australia. We don't HAVE 200 million, 300 million, or even 20 million people.
It costs vastly more to provide services in New Zealand than it does overseas by virtue of our low population.
Hullo! 4.5 million on a landmass the size of the UK?
Both networks have spent around $600 million on rolling out New Zealand-wide - covering about 4.5 million people.
Spend the same in the UK you'll cover about 60 million.
If the same rates were charged in New Zealand as in the UK, it would probably take 15 times as long to recoup the money investors shelled out to get us connected.
bravo ..I agree ..stop whining and enjoy what you do have ..not what you cant have
The last thing Telecom wants is a price war , which why they are spouting all that nonsense about performance and technology. But at the end of the day they will still have to run the old CDMA, they've spent $500m on the new 3g. All costs voda doesn't have. The CEO said that he's looking at having 50% of the mobile market! That's an admission of defeat already. It will be a race to the bottom towards the end of the year.
Two networks (CDMA & UMTS 850) that do not work together. Business customers will need two devices in case of failure - MADNESS
It is about gouging as much as possible out of the suckers that have no choice but to use these robber baron "services".
What utter tripe! I was 40 before I first encountered a cellphone, and managed to live quite happily. I now carry one when on company time, and leave it on the bedside table with my plastic door-key when on self-time.
No one is left with "no choice" regarding this stuff, if you don't want to pay then don't play and live a more relaxed life.
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