Cost-conscious callers scrap landline in favour of mobile

Stacey Williams gave up her landline more than a year ago, choosing to rely exclusively on her cellphone - an option that costs her about $50 a month.

"It's common sense really," she said. "With my budget, it's either one or the other, and I'm not a big chatter."

The 30-year-old Aucklander represents the next trend in the telecommunications industry - callers moving away from traditional fixed lines. But first, mobile costs have to come down.

"Overall the business from traditional calling is declining and that's happening around the world," said Telecom spokesman John Goulter.

Telecom has 46 per cent of the cellphone market, second only to Vodafone, says Mr Goulter.

But even with more than 60 per cent of people using cellphones, telecommunications analyst Paul Budde says the telco companies are not offering the right environment for true market penetration.

"The whole thing is price-driven," he said.

"New Zealand is running far behind the rest of the world. The mobile operators are not really providing the right sorts of prices."

Stacey Williams pays about $50 for a package deal that includes unlimited text messages and 200 minutes of call time.

But cellphone customers in the United States can pay $40 for 600 minutes of call time plus free calls on nights and weekends.

Mr Budde says up to 2 per cent of people here have given up landlines in favour of cellphones. But those numbers will grow.

"I expect to see this happen in New Zealand toward the end of this year," he said.

Mr Goulter said cellphone charges were falling, "so that the distance between landline and mobile is fast fading".

And the Commerce Commission is reviewing the intercarrier fees that companies charge each other to end calls, something that a commission spokeswoman says may bring down costs - if the companies pass on their savings to customers.

Stiff competition could also cause companies to drop prices, said Mr Budde, but that seemed unlikely because intercarrier fees deterred new brands with low market share.

"This is not a market that anyone is going to come into without a lot of money," said Ernie Newman, chief executive of Telecommunications Users Association, an industry advocacy group.

In the quarter to last December 31, Telecom reported that cellphone-related revenue increased to $179 million from $151 million, an 18.5 per cent jump over the year-earlier period.

At the same time, traditional calling revenue fell 7.6 per cent, to $230 million from $249 million.