TelstraClear’s new mobile ‘network’ a load of hot air

Local media reports have hailed the launch of a third mobile network –but TelstraClear’s new offering will hardly worry its competitors.

TelstraClear announced today it is offering a third mobile phone service, with a plan costing $20 a month.

This price includes a free Nokia 6275i phone, which retails for $499, and 500 texts per month.

But it doesn’t include any calls – these are charged at 29c per minute to New Zealand landlines or mobiles. Subscribers can also call a mobile or landline in Australia, the UK, Ireland, the US and Canada for 40c a minute. It also has no international roaming capabilities.

The catch with the plan is that it’s only available as part of a home phone line and broadband bundle, and customers are locked into the arrangement for two years. This includes an early termination charge. TelstraClear’s head of consumer sales, Steve Jackson, said that there could be potential in the future for a standalone mobile service, free from bundling.

“But those probably won’t be at the current prices. Nothing’s ruled in – nothing’s ruled out.”

Kiwi customers endure some of the highest-priced mobile calling plans by OECD and Commerce Commission standards, and there has long been a demand for a decent third competitor to tackle Vodafone and Telecom’s dominance.

Unfortunately, unlike NZ Communications, which is actually building its own infrastructure such as cellphone towers, and/or co-opting its equipment on Telecom or Vodafone towers, TelstraClear’s offering is a simple virtual network.

This means it is simply buying its services from Telecom at a wholesale rate, and then slapping its margins on top.

It shouldn’t be a problem for Telecom to match these prices if it so desired – or choose to offer a similar rate without any of the bundling and/or lock in that TelstraClear’s deal includes. 

To be fair, it is early days and this won’t be the only offer available. “This is our first entry to the market, and we have a plan moving forward to introduce more handsets, more features, better data services. There’s a whole roadmap here – this is only the first cab off the rank,” Mr Jackson says.

Given that Vodafone and Telecom are in the process of upgrading their 3G networks, now might not be the best time to get locked into a no-frills 2G offering until 2010 – when Vodafone’s, and Telecom’s, new networks will both be up and running.

TelstraClear is looking at piggybacking on Vodafone and Telecom’s 3G network, but there are no confirmed plans at this stage.

“Well, we haven’t launched this to turn it off in two years. We do have a migration path. This current plan is just to say to the public, ‘look, we’re here, and we’re serious.”