Helen Twose looks at what's in store for mobile-mad New Zealanders this year

It is more than 10 years since New Zealanders had their first taste of texting on mobile phones.

Since then we've become a nation hooked on mobiles.

We now have more mobile phones than people and spend around $2 billion a year on mobile phone services.

New Zealand's mobile network operators - Telecom, Vodafone and new arrival 2degrees - will be hoping our love of cellphones translates into revenue as they switch focus to providing customers with more sophisticated data products.

As operators invest in building or upgrading networks and competition cuts into margins on traditional voice and text services, the mobile telcos will be looking to data to boost revenue growth.

Data services allow users to check the weather, update Facebook, send an email, get directions to the nearest petrol station and tweet about it on Twitter.

With Telecom and Vodafone set to move to higher-speed 3G technology and 2degrees making the jump to 3G this year, mobile networks will be able to handle greater data speeds and volumes.


Telecommunications analyst Nathan Burley of Ovum said the trends that began to dominate last year - smartphones and mobile broadband - will continue this year.

Burley said mobile broadband innovation has been driven by better networks, the evolution of devices to allow easier access to mobile broadband and price falls, citing Telecom almost giving away a USB stick in a pre-Christmas promotion.

"We've got a saturated market for traditional voice usage and for operators to grow they have to grow on the data side.

"The selling of data packs to handset users as well as USB modems and other mobile broadband services are two of the most attractive areas," Burley said.

IDC telecommunications analyst Yael Lord said consumers were not likely to want to add much more to their overall telecommunications bill to access mobile broadband.

"We expect price competition but not a war and that's because operators have pressure on their revenues from their other legacy streams," said Lord.

Melbourne-based Burley said the competitive Australian mobile market had seen dramatic falls in mobile data costs.

Data pricing in Australia plummeted 55 per cent in 2007, slightly more in 2008 and a further 15 per cent last year.

"It's not going to fall 50 per cent next year, we're probably looking at another 10 or 15 per cent decline. We still don't have huge penetration in the mass market, but we are beginning to see adoption."

Despite mobile handset sales slowing in the past year, sales of smartphones, such as Apple's iPhone, have grown strongly.

Research group Gartner estimates smartphone volumes represented 14 per cent of the 1.2 billion mobile devices sold worldwide last year, up 24 per cent on 2008.

Gartner expects smartphones to account for 38 per cent of the market by 2013.

Telecom Mobile's Paul Taylor sees cheaper smartphones as important in pushing data products into the mass market.

Expect to see Telecom targeting market segments such as students with a phone from the Blackberry Pearl range or similar.

"We know smartphones or feature phones drive higher ARPU [average revenue per user] and we'd love to get those into our customer's hands," Taylor said.

2degrees has focused on the voice and data market, but 2degrees chief executive Eric Hertz is promising more affordable rates for data.

"We'll continue to innovate and bring other kinds of smartphones and devices into the marketplace that make it more affordable," said Hertz.

He said there were a couple of paths for mobile network operators.

"If you go the Apple iPhone path, you're a 'dumb pipe' because they take the relationship with the customer, they create the market for applications, they write the rules on how applications are written.

"The alternative is we'll build our own platform where we'll bring applications in that might be branded."

Hertz cited Vodafone's 360 as an example.

In September, Vodafone New Zealand's British-based parent announced a new service, Vodafone 360, to replace its 6-year-old Vodafone Live portal.

Vodafone 360 will allow users to link phone and email contacts with social networking services.

The offering will include tailor-made phones that optimise the service, but some services can be used by non-Vodafone customers.

Kursten Shalfoon, Vodafone New Zealand's general manager of products and services, said New Zealand is in the second wave of Vodafone operators to get access to 360.

"Really the thing that I'm most excited about is the app [application] store and what it will do for New Zealand," said Shalfoon.

"Local developers can develop and app here and once 360 rolls out across all the Vodafone properties they'll have access to 500 million customers."

The project links all the Vodafone networks worldwide to enable applications to be shared among the different operators.

"We see that as the future. When you talk about social networking if you look at what we are as a company, we provide communication ... and social networking is just another form of communication," said Shalfoon.

Telecom's Taylor said social networks and applications had grown by around 200 per cent year on year.

Taylor said Telecom would not be a "dumb pipe", and is continuing to work on applications specifically for its customers' phones.

Hertz described a middle ground that would accompany 2degrees' 3G launch.

"We can bring in all kinds of content, where it may or may not be branded, and there is a bit of revenue share between us the carrier, the content providers and the hosting services."

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Industry figures give their views on the future of the mobile market
KURSTEN SHALFOON
Vodafone New Zealand

It's all about mobile data. A new category that we launched into last year, which I see will be very big this year, is the netbook area and cloud computing.

Something that traditionally didn't have a sim card now has a sim card in it connecting up to your applications.

I think that's the next stage - always being connected, always getting your information wherever you are.

PAUL TAYLOR
Telecom Mobile

Some of the things that I've seen that are quite sexy are devices getting smaller, and more functionality.

The thing that has really grabbed me is the new laptops coming out.

In the future you will be able to roll the keyboard up and plonk it in your bag.

Really cool, space-efficient stuff.

Also, a laptop that is just a stick that you can project the screen wherever you are and project the keyboard because it's just an infrared keyboard.

Because networks will be stronger and faster in more places, then you want to have the devices to back the network up as well as the network to back the devices up.

ERIC HERTZ
2degrees

Devices have been converging their capabilities - offering voice, text, data services and video.

I think what we're going to see in the next few years is divergence.

A good example would be that you have a phone with a camera in it, but what you'll have next is a camera that talks to the network so when you take a picture you can automatically upload it to your email or upload it to your Facebook page.

Let's say you are a professional photographer with a newspaper.

The picture will go directly to a website or a server back at the office and go to an editor quickly.

You'll download music directly to your music device over the network.

The health community is really excited because they are developing devices for those who have pacemakers that are the size of a bandaid which you put on your body and transmit back to a doctor or intensive care unit or to a server which a doctor can access directly from his office.

So people who might otherwise be in a hospital bed can be monitored at home.

I think there will be 500 per cent penetration of devices because they are going to change in character - it's not that we're going to carry three or four phones around.

You'll still have converged devices but the really cool stuff that's happening is that cameras and MP3 players are getting the capability to talk to the network and will enhance its usefulness.

NATHAN BURLEY
Telecommunications analyst at Ovum

What we're seeing with the take-up of smart phones and mobile broadband is the traffic on the operators' networks has increased.

That has caused problems in some parts of the world.

Other operators have been more prepared and provisioned well for the subscribers they bring on.

But there are a lot of interesting ways people are thinking about how to manage some of this traffic by not just putting in more capacity but using different traffic management systems.

One of the things that they can do is sell differentiated services, based on quality of service.

So you offer certain subscribers, maybe your high-end business, the ability to have prioritised traffic.

They may pay a premium to make sure their traffic is prioritised over others, which is an interesting business model that we're starting to see gain some traction in Europe.