KEY POINTS:
Got your new iPhone yet? Want one of those slim and shiny rectangles?
You can't have missed out on the marketing, and the marketing within the marketing.
What other cellphone has been launched with such hoopla? When did Nokia or Sony-Ericsson or Samsung or Motorola have people camping
out on the winter streets - even if they were put up to it by people marketing other products or services?
It's not hurting the Apple brand and it's not hurting Vodafone New Zealand which has an exclusive on the 3G iPhone here and should win a sizeable chunk of Telecom customers, going on overseas precedents.
As the only GSM network here, Vodafone has a monopoly it can exploit to the full with such a shiny new toy.
Its monopolist behaviour was on full display with its plans.
The top end drew instant negative reaction, as people worked out the $250 a month for 1GB of data and 600 minutes of talk would turn a $199 investment in a subsidised handset into a $6000 drain on the budget over two years.
Existing Vodafone One Account customers who buy a full-price iPhone can get 1GB of data a month for $49.95. Compare that with the United States, where AT&T is charging US$30 ($39) a month for unlimited data or $45 on its business plans.
The argument being made by Vodafone reps at last week's launch was the rates could represent a 20 or 30 per cent saving for some existing power users.
But it's hardly disruptive pricing to go with disruptive technology.
New Zealand buyers of the iPhone are at a disadvantage in the world of data. It's not just the price, it's the fact they don't yet know how much data this device is really going to take. In the US, AT&T gets almost double the average monthly revenue from iPhone subscribers as it does from its other wireless customers.
Is the 250MB in the $80 a month plan enough? Or will that be burned through in a week and then you're paying 10 cents a MB?
It will all depend on the sort of applications you use, many of which you don't know about yet or which haven't been developed. A few too many funny pictures coming into your email could blow the cap.
So what is the competitive landscape?
Telecom is finally rolling out a GSM network, after the rest of the world left its CDMA platform behind.
Newcomer New Zealand Communications is also building a GSM network but in the absence of a workable co-location regime, is mired down in the resource consent process. Meanwhile, Vodafone is co-located in more than 200 Telecom exchanges, consolidating is incumbency.
The Commerce Commission's most recent overview, released in March, found New Zealand mobile plans continue to rate poorly against OECD benchmarks, particularly for the medium user, who pays about 150 per cent of the OECD average.
Where Vodafone has been effective in winning business while dropping prices is in its use of closed network or "on-net" pricing plans such as Best Mate which allow unlimited communications with one other Vodafone customer for a small monthly fee.
That's significant enough for the commission to believe such plans contributed to the decline in average mobile calling prices for Vodafone customers.
Even with cheap calls to best mates, Vodafone New Zealand customers rack up less than 130 calling minutes a month, compared with 230 minutes in Australia or Ireland.
The commission noted it was logical for mobile network operators to encourage customers to make on-net calls and on-net texts by making the price significantly cheaper than calling the competitor's network.
That's set the alarm bells ringing at the competition watchdog.
If termination rates were close to cost, competing networks could offer similarly low rates for both on-net and off-net calls.
But they aren't, and last year's decision by acting communications minister Trevor Mallard to allow Telecom and Vodafone to "voluntarily" lower termination rates on a gradual scale rather than have a regulator set the price is proving to be an extremely bad call.
"High mobile termination rates are a particular concern for new entrants, who have no established community of users, because they find it difficult to attract customers from existing networks which offer low on-net rates," the commission said.
It is now considering whether to do a full investigation of mobile-to-mobile termination rates.
It estimates the cost of such calls averages about 9.5 cents a minute and SMS costs the network operator about 1.1 cents a text, compared with the 9.5 cents Vodafone will charge Telecom.
Vodafone argues the commission is on the wrong track, the investigation would be a waste of time and money, traffic flow between interconnected networks tends to balance out over time and "there is no evidence of market failure because NZ Communications have [sic] not launched yet".
Of course, if NZ Communications or any other new mobile operator is choked at birth because of predatory pricing by incumbents, there would be market failure but nothing could be done about it.
NZ Communications told the commission high mobile-to-mobile termination rates was one of the major barriers it faced.
Capital it would invest in building its business will instead be transferred to the incumbents as monopoly rent.
It says the reason there are now more mobile phone connections in New Zealand than there are people is that almost half of mobile phone users have two handsets, so they can take advantage of on-net pricing deals.
The next stage towards an inquiry is likely to be the release by the commission of an issues paper.
* http://www.comcom.govt.nz/IndustryRegulation/Telecommunications/Investigations/Overview.aspx
