Telecom to offer price deals

Telecom plans to counter assaults on its main calling revenue by offering a combination of more services, better quality and bundled prices.

Matt Crockett, wired division general manager, said Telecom was taking seriously Vodafone's recently announced plans to offer broadband services and mobiles that could be used as home phones.

"There's absolutely no doubt that they're a substantial and credible competitor," he said.

Telecom had the advantage because it could offer pricing deals for customers who used its cell and fixed-line phones, he said.

Like Vodafone, Telecom planned to offer dual-mode handsets that could be a mobile and home phone. While the company had no definite introductory date, Crockett said bundled pricing plans were only months away.

Telecom had followed a global trend in that its bread and butter - local service and calling revenue - had declined for the past few years. Combined revenue for the year ended June 30 was more than $2.44 billion, down from $2.57 billion a year earlier and $2.67 billion in 2003.

The biggest threat was low-cost internet-based calling services such as Skype, where computer-to-computer calls were free and fees for computer-to-phone calls were only nominal.

But Crockett said services such as Skype could not guarantee quality and did not take advantage of the capabilities introduced by internet protocol.

"We think Skype is a relatively anaemic offer from the perspective of the type power that IP voice enables."

The counter to Skype and its ilk were services such as allowing users to manage calls on their computer. One such service would enable voice mails to pop up in an on-screen interface such as email. Contacts could also be dialled directly from an on-screen address book.

Telecom offers similar voice-over internet protocol (VoIP) services to businesses and expects a major ramp-up soon as it rolls out its next-generation IP network.

"We're at a demand inflection point," Crockett said. In the past year Telecom had deployed a handful of VoIP services a month, but "we're going to be seeing that in the hundreds over the rest of this year".

Businesses had found the lower cost of VoIP appealing but the focus was shifting as new uses - such as the on-screen voice mail example - were introducing productivity benefits.

"A combination of those things has helped make VoIP less of a threat and more of an opportunity."

Telecom shares closed unchanged at $5.55.