Should we cry him a river? Vodafone man says its all very well for the Commerce Commission to regulate down prices – but telcos are also expected to build new networks, and get their wallets out for the coming 4G spectrum auction.
The Commerce Commission this morning released a mobile market monitoring report that found an up-tick in competition – or at least in terms of the key indicator of calls and txts being made between networks (it also delayed a more comprehensive report).
Vodafone corporate affairs manager Tom Chignell says the report contained "great outcomes for NZ customers". Building on the figures in the watchdog's latest quarterly report (read the full version here), he summarises:
(Off-net means a call or txt between carriers, say from a Vodafone customer to a Telecom customer. On-net means a call or txt to a customer on the same network. 2degrees has historically argued that on-net plans like Vodafone's "Best Mates" server as a barrier to new entrants).
The commission now requires Telecom, Vodafone and 2degrees to file customer number and usage data within 20 working days of the end of each month – a move sparked by fears expressed by Tuanz and others that last year's regulation of wholesale network charges would not flow through to retail pricing, which the commission cannot control.
Cry me a river
Mr Chignell is less enthused about commercial trends.
"For the industry, the underlying trends are challenging," he told NBR ONLINE.
Again he ran some calculations, using the report's figures. He found:
At this point, many NBR readers (and indeed your correspondent) will have the gut reaction, Well boo-hoo, doesn't particularly sound like a problem to us.
But there is also a counter-argument. If you squeeze the telcos too far, they won't invest network upgrades, or be so inclined to get out their wallets for the government's spectrum auction due later this year.
"This all comes at a time when huge demands are being placed on the current infrastructure to support exponentially growing mobile data and when the industry is poised to make significant further investment in 4G spectrum and technology," Mr Chignell says.
He adds, "These are challenging times for investment business cases in mobile. Mobile data revenues are of course growing, but not at a rate to compensate for the declines in voice and txt."
Mr Chignell says monthly monitoring is all very well, but "The purpose of the Telecommunications Act worth reiterating: 'To promote competition in telecommunications markets for the long-term benefit of end-users." (The emphasis is his own).
"We should be careful not to push short term outcomes at the cost of the long term benefits which come from investment," he says.
Vodafone NZ is not about to hit the wall.
In its most recently reported financial year (to March 31, 2011) it made $151 million on $1.69 billion revenue, a nice bump over the prior-year profit of $151.5 million on $1.59 billion revenue.
However, the company did warn that its current year is proving tougher.
And while a recent Commerce Commission annual telecommunications industry report found mobile data use was booming, it found mobile data revenue growing at a much slower rate – certainly not fast enough to compensate for the decline in voice and txt (see second and third charts above).
