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Telecom Will Delay Putting Up Mobile Phone Prices

TELECOM BUCKS COMPETITOR’S TRENDS AND WILL DELAY PUTTING UP MOBILE PHONE PRICES.

Telecom Mobile will not increase its mobile phone prices until the New Year, even though its main competitor has put up its prices.

“Telecom Mobile didn’t want to put up its mobile phone prices without informing customers that it was going to happen, prior to the price rise,” says Lorraine Witten, Telecom Mobile’s Chief Operating Officer.

In New Zealand the move to cut subsidies started with Vodafone five weeks ago. Its cheapest handset advertised on its website, without a subsidy, now starts at $189.

The plug has been pulled on subsidies across the Tasman as well. Vodafone Australia was one of the first telcos to pull the plug on subsidies there. Telstra in Australia has also moved to reduce subsidies.

The price of a mobile phone has historically been heavily subsidised by the telco. Customers have not paid the real mobile phone price and may not appreciate the true value of their phone. The amount of subsidy in the New Zealand mobile market has been as high as 100 percent.

Subsidies have helped consumers enter the mobile market by making mobile phones affordable by spreading the cost of the phone over the length of the customer’s contract.

“The mobile market has seen a huge growth in the past two years. More than 60 percent of New Zealanders have a mobile phone today. The mobile market is well established and most people who want a mobile phone now have one.

“We anticipate a slow down in new customer sales and more focus on people purchasing a diversity of features and services,” says Ms Witten. To back up this view, the sale of mobile phones world-wide dipped by 9 percent in September according to Gartner Data Quest.

Ms Witten says that while the world-wide trend is for subsidy cuts, there will always be a range of handsets and prices for Telecom customers to choose from.

“It’s about being able to fit into our customer’s lifestyle by giving them the flexibility to choose their service relationship with us. Customers on individual accounts can choose to have no fixed term contract, or if they want to take up a fixed term contract they will be able to get a reduced price phone. There’s something to suit everyone.”

The mobile market is becoming more sophisticated, she predicts, with replacement handset sales dominating the market over the next five years as consumers choose higher specification phones with better features and services, such as access to Xtra email, news, movie schedules and games.

“The mobile phone market is maturing. Mobile phones are getting smarter and more sophisticated and customers expect a lot more value and service from their mobile phone. They are no longer the simple voice terminals they once were.

“The one-size-fits all philosophy for mobile phones is becoming redundant. Mobile phones have the ability to play your favourite music, retrieve email and access the diversity of the Internet. They are multi-faceted and consumers want to upgrade to them,” she said.

ENDS


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