Cheap mobiles call for cyber services

By RICHARD BRADDELL

A price war aimed at grabbing market share has driven New Zealand cellphone prices to unsustainably low levels, says a leading telecommunications forecaster.

Bertrand Bidaud, telecommunications director for Gartner Group Asia Pacific, said cellphone operators would seek to rebuild average user revenues, which were the world's lowest, by selling mobile internet and other services on top of voice-calling.

Cellphone penetration in New Zealand, which had more than doubled in two years, was respectable, heading off North America and only slightly lower than in Europe, he said.

But shifting from market share to boosting average revenues per user would flatten mobile growth in a few years.

North America would overtake New Zealand's growth by 2003. And while penetration here would still be over 60 per cent, it would lag behind Europe's 80 per cent.

Japan and South Korea apart, cellphone internet and data services had been slow to take off, leading to accusations that the new wireless application protocol (WAP) for mobile web traffic was a flop.

But Mr Bidaud said that while early users had often become less enthusiastic as they realised that wireless internet was painful to use, it was dial-up platforms that made access slow and irritating.

New Zealand would be one of the first countries to have the GPRS system, being launched now by Vodafone, which eliminated the need to dial in.

Because GPRS network was packet-switched rather than using conventional exchange-type switching, the phone was always in contact with the network, thus providing immediate access to the internet.

The runaway success of cellphone internet and data in Korea and Japan could be attributed to packet-switched CDMA networks of the type that Telecom would launch next year.

Their largest use was in games and entertainment.

Mr Bidaud said the cellphone commerce market was still very much in a free-for-all phase and there was room for imaginative players.

One niche that mobile operators could occupy was collecting bills.

As it would cost about $1 to process a single bill through the banking system, the mobile operators were ideally placed to aggregate consumers' bills and collect payments.

The cost of a pizza delivery, for example, could be bundled with other small payments on the monthly cellular bill, or it could be taken off a prepaid card.

Gartner's forecasts for the value of M-commerce are wide-ranging, from $US250 billion ($625 billion) in 2005 to $US1.8 trillion.

The variance hinges on assumptions such as whether the market is fragmented by confusing applications and standards.