Telcos fight pitched battles for one goal
- 12 August, 2001 22:00
The first is the mobile war - Telecom and Vodafone are eyeballing each other at 20 paces with their chosen pistols, CDMA and GPRS respectively, and they've already fired their first salvo. Vodafone came out early and fast (to switch metaphors), swinging wildly with the claim that it had one of the world's first nationwide GPRS networks. This was towards the end of last year; Vodafone beat Telecom to launch day by several months.
However, a network is only as good as its usability and, quite frankly, for that you need phones. Vodafone hasn't had a good run with GPRS phones - its three main handset providers, Nokia, Ericsson and Motorola, just haven't come to the party. A search on any one of the big three's corporate sites for GPRS leads to a dead end. They have phones - Motorola alone has five models - but they're not keen to let you know about it. Vodafone has one model available at the moment, from Ericsson, and more on the horizon but, really, they're falling behind.
Telecom, on the other hand, has gone for the Asian brands. Hitachi, Kyocera and Samsung are hardly household names in New Zealand when it comes to the cellular market but there they are with quite a nice line-up.
Of course, it's still early days. Neither network is running at full speed yet - both are easing themselves into that end of the market with a slower introductory phase. Telecom CDMA users will have to buy new phones at the end of the year if they want to take advantage of the full network speed of 155kbit/s, but frankly, I wouldn't bother. Buy a PC card for your laptop that will allow you to connect to the net at that kind of speed instead. You're hardly going to watch the latest trailer for Lord of the Rings on your cellphone, are you?
Price is another area where again Telecom is stealing a march on Vodafone. Telecom has a range of price plans aimed at a range of users from casual to high-end user. Vodafone has a sliding scale that starts out at $30 a megabyte of data and goes on from there. Vodafone says it won't be fighting this war on technology because it had a far superior technology last time round with GSM and nobody cared. Instead it will fight based on service and applications, yet it's not doing that at the moment either. Outgoing chief executive Grahame Maher talked about SMS messaging - when BellSouth was doing it users had a complicated billing arrangement that meant nobody bothered. Vodafone came along, set the price at 18 cents per message and boom - instant market. Vodafone will have to do something similar with GPRS if it's to stay in the hunt.
The other battle going on is the fight for number two telco behind Telecom. Traditionally Clear has been the great rival - it was the first to arrive and set up shop against the incumbent and it's fought a lot of battles that have made it easier for other telcos to come in to the market behind it. Most developed countries have gone through this phenomenon and the casualty rate is high, so kudos to Clear for surviving long enough to see the regulatory regime changed.
But now it's got real trouble. I'm not talking about trouble from Telecom - that it's used to by now. This trouble comes in the form of TelstraSaturn which has arrived on the scene, decided to ignore Telecom as much as possible and build its own network. It's made a lot of mileage from the number $1.2 billion, which it claims it is spending, though that may be coming home to roost now Austar, one of its parent companies, is haemorrhaging money. Clear has also been building its network, adding new technologies and new offerings, and generally doing all the things TelstraSaturn has been doing as well. But Clear has a perception problem - it's seen as the company that takes Telecom to court and whines about the regulations, rightly or wrongly. Former chief executive Tim Cullinane is remembered for the comment he made when BT bought Clear - when asked what was the best thing about BT's purchase he said they have more lawyers than Telecom and that would help.
So Clear has to battle TelstraSaturn, or at least the public perception of TelstraSaturn, or risk losing market share and becoming number three. This battle, I think, is only just beginning.