The rise of the smartphone and a third competitor in the telco market has shaken things up, giving mobile users more options than ever before. Research shows one in five young Kiwis switched mobile providers in the past year in search of a better deal. So what's driving the industry "churn"? Cassandra Mason reports.
Research suggests Kiwis are more connected than ever before.
Study findings from Google show more than half New Zealand's population now own a smartphone - a figure on par with the United States.
The survey, conducted by IPSOS MediaCT on 1000 New Zealanders aged 18-64, also found the rate of people using smartphones was up 10 per cent on the year before.
Forty-two per cent had spent more time online with their smartphone over the past six months, and 75 per cent said they wouldn't leave the house without it.
Making the switch
While we're more connected, many of us are looking for a better deal.
Mobile data collected by research company Roy Morgan shows 18 per cent of 18-24 year olds switched mobile service providers in the last year - 50 per cent higher than the average rate.
Overall, 12 per cent of mobile users aged 14 and over had switched providers. Only 8 per cent of Kiwis over 50 changed companies in the average year.
Why are people changing?
Of the customers surveyed, those aged 18-24 said better network coverage was the reason for making the change, while phone users over 50 were more concerned about the quality of customer service.
Telecommunications Users' Association NZ chief executive Paul Brislen says the "churn" of customers can be put down to the wide range of options and better deals now available.
"There have been these tremendous changes in not only the way customers use their phones, but also in the competitive landscape."
2degrees' 2009 entrance into the market has "really shaken things up", he says.
"2degrees has arrived and the other guys just can't sit there - they have to compete."
This especially affects young people, who are far more likely to be price sensitive and who often move to get the best deal.
"There's a lot more choice. You don't have to buy a plan you might not quite fit, and that's causing a lot of people to churn and move around."
New Zealand once lagged behind countries such as Australia and the US in price deals, but it has come a long way in the past few years and our prices are now almost as low as those in other countries.
"You can get better deals overseas but we're quite well served in that we've got three network operators who are covering a large percentage of the population," Brislen said.
"We've got a better competitive landscape than Australia these days."
Rapid changes in technology are changing the industry as customers realise that signing up for long-term plans doesn't work for smartphones.
The rise of the smartphone has also forced service providers to change their overseas roaming policies, which until recently were "criminally expensive", Mr Brislen said.
Who offers the best deal?
Brislen says Vodafone has the fastest internet service, but 2degrees has the cheapest prices - the best deal depends on what's important to the customer.
A survey by Consumer New Zealand sheds some light on what you can expect from the three big providers.
The survey, which questioned about 10,850 people in October last year, found that 2degrees was "by far the best" with an 86 per cent rating for overall performance and above-average results for customer service and reliability.
Telecom rated as "average" at 75 per cent for overall performance but did not do so well on customer service.
Vodafone, the country's largest telecommunications company, rated lowest at 70 per cent for overall performance and "below average" for customer service and reliability.
Telecom and 2degrees were found to be the most reliable, with 34 per cent of both providers' customers reporting no problems with data speed.