KEY POINTS:
Increased competition in the home phone market is bringing record low prices for Kiwi consumers.
Heavy-hitters Vodafone and Orcon have launched new homeline and broadband networks following the Government's "unbundling" legislation allowing competitors access to Telecom's exchanges.
Armed with special offers and the latest technology, they're hoping to eat into Telecom's former monopoly.
Experts said it was a good time to sign up with Telecom's rivals, but warned against lengthy contracts because prices could fall even further.
Telecommunications analyst Rosalie Nelson said consumers caught in the promotions crossfire were being offered the most competitively priced packages seen in New Zealand - by all providers.
Nelson, of research consultancy IDC, said providers were using catchy ads, door-to-door sales teams, better deals and new gadgets to snare customers.
IDC figures from the December quarter showed Vodafone's assault on Telecom "during a time of transition" was hurting Telecom, which had secured only 26 per cent of new internet customers.
Vodafone's aggressive marketing and free broadband deal helped it gain about 70 per cent.
"They have aspirations of painting New Zealand red," said Nelson. "Their pricing is pretty competitive."
The first quarter of this year saw Telecom start to claw its way back - obtaining 40 per cent of new internet connections.
Nelson said that was "probably thanks to promotions like broadband at dial-up prices".
Orcon is hoping to entice home phone and broadband customers with faster broadband speeds and the promise of no contracts.
An expensive home-delivered marketing pack says customers will be so happy with the service they won't want to switch providers. That's offset by the network being restricted to 23 Auckland suburbs, although it is expected to be available in Wellington by the end of the year.
While it's not known exactly how many customers are switching telcos (neither of the big two would release figures), it's clear Telecom is feeling the pressure. Vodafone spokesman Kursten Shalfoon said last month was its "biggest-ever" in terms of new homeline/broadband customers, thanks to the launch of the new Red Network.
Shalfoon said Vodafone's "aggressive" marketing was shaking up a previously "static" home calling market and claimed it could better Telecom's prices "almost every time".
For example, Vodafone offers a homeline system with unlimited local calls for $25 a month - undercutting Telecom's minimum monthly rental price of between $37.05 and $44.85.
That could save a customer who makes only local calls more than $200 a year.
But Telecom still has tricks up its sleeve.
Spokesman Adrian Littlewood said despite it being a "pretty competitive time", the telco was "out there fighting just as hard as everybody else".
Besides the recent release of "the T-stick" - claimed to be the smallest mobile broadband device on the market - November sees Telecom launch a new network, similar to Vodafone's 3G platform.
That would bring more "exciting" new offers and products - understood to include the iPhone.
MOBILE USERS STILL PAYING MORE
Independent experts say mobile calling in New Zealand is still pricey compared to overseas, mainly due to lack of competition.
Vodafone and Telecom claim their prices are competitive, but analyst Rosalie Nelson said Kiwis had yet to see the "no frills" options offered overseas.
They include SIM cards with "big buckets" of minutes for a set price. "We're not talking 200 minutes, we're talking huge amounts, like 500 minutes.
"It's effectively 'all you can eat' for a flat rate."
A Commerce Commission report on the first quarter of the year showed mobile charges in New Zealand were consistently among the highest in a list of the world's 30 most developed nations.
Nelson said the major players had been competing on value rather than price, but the launch of a third major network at the end of the year could improve the situation.
She warned the new company, NZ Communications, would be entering a "saturated" market and may struggle to convert Telecom and Vodafone's existing customers.
Vodafone spokesman Kursten Shalfoon said it was difficult to compare pricing structures. Options such as "best mate or "txt 2000" amounted to "very low" charges per call. A Telecom source suggested there could be more competition from November, when the firm joined Vodafone in offering the iPhone, although that was not officially confirmed.
Weighing up the costs
Jennifer Barnes and her husband Terry have been Telecom customers since moving to New Zealand from South Africa 14 years ago.
Calling friends and relatives in their former homeland is a necessity, and the average monthly bill for the couple and their two children can "easily" reach $160.
Last month's was $148.77 comprising almost $50 for a broadband internet package with 3GB of data allowance, $46.50 for homeline and call minder, about $5 for international calls and $40 for mobile calls. Jennifer says they often run out of data allowance and have difficulty deciphering the bill.
She says she would change companies in a flash if offered a better deal.
Vodafone and Orcon say they could beat Telecom's price.
Vodafone suggested a $105 monthly package including 20GB of data and unlimited evening and weekend calls to New Zealand landlines. It could more than halve the cost of mobile calls, which were not included, but could only match Telecom's price for international calls.
Orcon suggested a $119.95 package including 25GB of data and unlimited local and national calls. It could also offer unlimited calls to one of 15 international destinations, but calls to New Zealand mobiles would be extra.
Telecom told the Herald on Sunday the Barnes may not have to switch at all. A spokesman suggested a bundle of services which could slash their bill and double their internet data allowance.
For little more than $114 a month they could get a home phone package offering landline calls to anywhere in New Zealand and Australia for no more than $2.50 a time.
The recommended plan offered calls to South Africa for 89 cents a minute and were capped so they would not pay more than $10 for a two-hour call.
By dialling 0161 before a South African home phone number, the cost would be 16c a minute week nights and weekends or 21c a minute in the day.
