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A cellphone price war is set to erupt as a third telecommunications giant attempts to break the stranglehold Telecom and Vodafone have on the mobile phone market.
The Herald on Sunday can reveal that Telstra Clear will tomorrow launch its own mobile network to the public, providing what
the company calls a "staggeringly cheap" choice for cellphone users.
The competition is expected to lower the prices charged by Telecom and Vodafone which have been labelled too expensive by international standards, according to the Commerce Commission reports released in April.
The new player into the mobile market has been welcomed by Consumer New Zealand chief executive Sue Chetwin, who believes "a price war could happen, and while it lasts it's good for consumers".
She said Telstra Clear's offering sounded like a "reasonable deal" but warned consumers to check the fine print on contracts. The new launch could spark other attractive deals from rival companies.
"Competition is great for consumers as it will bring down prices. It looks like a reasonable deal that people can compare with Telecom and Vodafone," said Chetwin.
Steve Jackson, the head of Telstra Clear consumer market division, said an announcement about their deal would be made in TV advertisements tonight and consumers could get connected from tomorrow.
Telstra's new deal includes a free Nokia handset worth nearly $500 - with 500 free texts to both rival networks and a flat 29c per minute national calling - with a monthly access fee of $20. Overseas rates to Australia, US, UK, Ireland and Canada will be 40c a minute.
The main catch is that consumers need to be signed up with Telstra Clear to supply broadband and home landline for 24 months. But Jackson argues Telstra Clear rates are fiercely competitive - $71.95 a month for both in Auckland ($62.90 in Wellington and Christchurch), compared with about $71.35 monthly with Telecom in Auckland ($67 in Wellington and Christchurch) and about $70 with Vodafone in the three major centres for both services.
Alison Sykora, Vodafone spokeswoman, welcomed the third player in the cellphone market.
"Competition is always good for consumers and therefore the industry. Customers will ultimately decide where the best deals are and we're confident that we have great value."
Telecom spokesman Mark Watts was also confident of keeping customers happy.