Kiwis are being encouraged to play their mobile providers off against one another as telcos throw up extravagant sweeteners to keep customers from jumping ship.

Market analysts are heralding an era of competition where telcos operating the same mobile network technology are battling for customers who are talking, texting and typing more than ever before.

One customer was astonished when Telecom offered her about $1600 worth of technology and credit over two years after she told it she was switching to Vodafone to get the new iPhone 4.

The Vodafone deal promised a free iPhone 4 and a 24-month contract with double the minutes she was getting with Telecom, as well as 2500 text messages, 1000 pxts and 3GB of data.

She decided to switch after getting fed up with Telecom, having been on a contract with it for nearly 15 months.

"I was blown away. As soon as Vodafone came into the picture, they bent over backward to try to keep me. But it was too little, too late. I thought, wow, they're obviously really battling to keep customers."

But Telecommunications Users Association chief executive Paul Brislen was not surprised by the offer.

He said mobile deals were heating up in a "new world" of competition.

With Telecom, Vodafone and 2degrees using the same technology, it was easier for customers to swap network providers, and smartphones - the market's fastest-growing segment - made that all the more important.

"It's easier now for a customer to keep the same handset and move to a new network than ever before and once you've got a smartphone, you'll also have spent a lot of money on applications, music, video and books so you won't want to get a new device when you switch provider," he said.

"Typically, [deals] tend to be in the form of credit on your account so you still have to buy the handset outright but get the money back over the next few months in terms of 'free' use on the new network."

Rosalie Nelson, an analyst with the International Data Corporation, urged cellphone customers to capitalise on the competition. "I think consumers should take advantage and shop around. People need to really stop and think, 'Okay, what is my average spend per month and how valuable am I?' That's going to be a big part of what we are going to see."

Drivers such as accessibility, Telecom's restructuring, the changing nature of mobile usage in workplaces, a drop in revenue from mobile minutes, an over-saturated market and growing data usage were colluding to tighten competition, Ms Nelson said.

"The big thing at the moment is there's a cost to acquiring new customers. This is where the telcos are really looking to see how they can retain customers, which does mean you get sharper deals, you get better customer service and you get better types of offers coming to the market.

"It's the kind of intense competition we've been seeing overseas for quite some time but really, it's only been like this in the New Zealand market for the last 18 months or two years."

The three main players in the mobile market each agreed smartphones had changed the game.

Vodafone spokesman Matt East said cellphones were no longer just about voice and texting.

"The smartphone isn't a smartphone without data, so that is the direction telcos must go in," he said.

Stephanie Fergusson of Telecom said the firm was seeing a growing market of iPhone and smartphone customers wanting to bring compatible phones over to the XT network.

2degrees chief financial officer Larry Moore's advice for consumers was not to marry themselves to a contract when deals would only get better.

"If I was offered $1600, the first thing I'd be asking myself is have I been paying too much? It's a good thing for the consumer to be in a position of choice."

SMARTPHONE DEALS - WHO'S OFFERING WHAT

Looking for a smarter smartphone plan? We surveyed the four phone companies for their best plan for about 1GB of data, 500 texts and 100 minutes of calling to any New Zealand network.

TELECOM
* The plan: Monthly smart phone $60 plan

* Calls: Anytime call 100 minutes

* Data: 1GB

* Texts: 300

* Contract: Open term if you have a smartphone or will
buy one at retail price. 12-month: $100 subsidy for a device, 24-month: Either a $250 subsidy, a Samsung Galaxy 550 or HTC Wildfire

VODAFONE
* The plan: Smart2 plan $61.30 a month for 2 years

* Calls: Anytime call 120 minutes before July 31

* Data: 250MB

* Texts: 2500

* Contract: Discount of up to $400 for selected mobiles. Add-ons extra.

2 DEGREES
* The plan: $39 Pay Monthly plan

* Calls: Anytime call 100 minutes

* Data: 100MB, 1GB for $20 in Auckland, Wellington, Christchurch and Queenstown

* Texts: 2500

TELSTRA CLEAR
* The plan: $40 a month

* Calls: 19c/minute for landline or mobile calls in NZ

* Data: 200MB

* Texts: 500

* Contract: Open term if you already have a handheld.