Cellphones and selling phones

Senior accountant and Shareholders' Association chairman Bruce Sheppard keeps his practice running and errant corporates flinching without ever diving into his pocket to answer a cellphone.

"I don't need one. The business hypothesis behind cellphones is that everything is urgent, everyone is indispensable and everyone needs to be accessible 100 per cent of the time," Sheppard says.

"I refute each one of them. No one is indispensable. Nothing is particularly urgent, and accessibility is a huge intrusion. Life should be more balanced - so bugger off, I'm not interested."

To prove the point, when the Herald first tried to raise Sheppard last week, he was out of the office for the afternoon, but returned our call bright and early the next morning.

"I was out in my dinghy fishing and I didn't need a cellphone with me," he explains.

"If the boat had sunk I would have swum to shore."

Sheppard's anti-cellphone stance may not be shared by many business people these days, although many often wish they could be rid of them.

More widely accepted is Sheppard's view that we spend too much on mobile technology.

"There's a lot of money that goes into cellphones that shouldn't," he says.

"I was at a board meeting for a little company I'm involved with where the general manager is running up $1400 a month worth of cellphone charges."

How was he doing that? "When you analyse it you find that a fair chunk of it is inappropriate or could be dealt with on a landline more effectively."

With his Shareholders' Association hat on, Sheppard often puts the boot into Telecom, but for all its foibles, he says the telco has done a wonderful job of convincing New Zealanders that cellphones are a necessity.

"If I was a shareholder, and I'm not anymore, I'd be ecstatically happy at their marketing skills - but don't try and sell me one," he says.

Telecom, and its only local mobile network-owning rival, Vodafone, reap the benefits of high cellphone usage in New Zealand, despite charging some of the steepest call rates in the developed world.

The two telcos have much more power over the consumer than in other parts of the world, where there is more competition, says Sydney-based telecommunications analyst Paul Budde.

Hopes that call prices would drop through increased competition from a third network operator entering the market in the near future were dashed this month when TelstraClear officially ditched plans to build a New Zealand network.

The company said the likely return on the investment in a new network - in the order of $570 million - made the project uneconomic.

Chris Loh, senior telecommunications analyst at IDC in Auckland, agrees New Zealand's cellphone calling rates are high because of the collective dominance of the two network operators.

"While there is competition - and it's quite heated between Telecom and Vodafone at the moment - there's not the degree of competition that you have in other markets. Because you've got these two dominant players with their own networks, there's not much incentive for them [to lower prices]."

But Budde warns this could cost Telecom and Vodafone in the long run as technology advances and new networks sprout up capable of carrying voice calls and data.

"If they hang on to their monopoly and their monopolistic profits, in the end they will lose. You don't win customers over by doing that," he says.

However, marketing consultant Chris Bray rejects the notion that Telecom and Vodafone are overcharging, saying the cellphone situation is New Zealand is a case of effective marketing at work.

Bray quotes marketing guru and former Coca-Cola marketing chief Sergio Zyman, who famously said: "The sole purpose of marketing is to get more people to buy more of your product more often for more money."

Bray says the job of a marketer is to help achieve the highest price for what is being offered.

"If someone can offer a cheaper service, then they will look at the airline industry.

"Simple 'price-checks' with other markets are not relevant - New Zealand's geography and population create a very different investment-return model than other places."

Bray says consumers clearly see value in the mobile services being offered by the telcos or they wouldn't buy them.

"Which is not to say that if subsequently someone else offers the same for less, they won't switch, and at that point their incumbent supplier will have to either match the competitor's price or lose a customer, which is what happens. Made a toll call lately?"

Budde says the emergence of the super-fast, long range WiMax mobile broadband standard and other advances mean competitive alternatives to the existing mobile networks are inevitable within a few years.

"There are obviously opportunities to forget about mobile voice and start looking at mobile data," he says.

"The beauty of mobile broadband networks is you can easily add VoIP [voice over internet protocol] to it so it's not as if you can't deliver voice. So there are lots of opportunities for entrepreneurs to move into that market."

He says that although companies such as Woosh (which has developed its own technology) and CallPlus (which has been testing WiMax) offer the potential to be more of a threat in the mobile market, the incumbent network operators will fight back.

"The strong point for the mobile network is not the technology, but the fact that the telcos have strong customer databases and a marketing grip on the industry. That's what the likes of Woosh are up against."

And the power of marketing may even be taking its toll on the staunchly cellphone-free Sheppard, who by the end of his interview with the Herald was showing signs of capitulating to the conveniences of the technology.

"I am debating whether I'm going to cadge a cellphone off someone else over Christmas," he confessed.

"I'm taking my son on an extended cycle tour on a tandem and there is nothing worse than being stuck in the Kaimanawa Ranges on a pushbike.

"Mind you, then you won't have cellphone coverage, so it doesn't really matter.

"Then I'll really be able to prove that they're useless."