Aardvark Daily

Please visit the sponsor!

A telco duopoly in the wind?

In the beginning, there was Telecom NZ.

Then, once the telecommunications marketplace was freed up to competition, Clear was born.

For some time, these were effectively the only two players in the market -- until mobile communications started to really get going.

In the mobile arena we saw only BellSouth (which was eventually bought out by Vodafone) offering competition to the dominant Telecom.

Then Telstra entered the NZ market and joined forces with Clear.

As a result of this competition, the cost of a (formerly very expensive) toll call fell through the floor.

I recall when I used to fear making even a single toll call, because I knew that it could easily boost my monthly bill by a massive amount. Thanks to competition, few of us even think twice before dialing outside our free-calling area -- or indeed, to any number, anywhere in the world.

Hooray for competition and choice!

In the internet sector, even more choice was available -- in fact Telecom wasn't even the first player in the market.

Unfortunately for consumers, for a long time, Telecom was an unavoidable layer in the internet cake so online access and use prices didn't fall nearly as fast as toll rates.

However, today we have a reasonable measure of competition in the marketplace and our comms costs have never been cheaper -- especially if you use inflation adjusted prices.

Unfortunately, changes are afoot - and they could see a consolidation within some of the major players that might reduce choice and competition.

Telstra is considering selling to Vodafone.

This would create a market with two giants -- Telecom and Vodafone, who compete in almost every market.

One might be tempted to think that this would have little effect on consumers - but let's not forget the incredible temptation to create a duopoly in such situations.

Why shred your profitability by competing with your main competition when, by cooperating, you can both set your prices at a level which allows you both to enjoy very strong revenues and profits?

Given how gutless our Telecoms Commissioner seems to be when it comes to actually protecting true competition in the marketplace, I fear that we may see a sudden plateauing or even increase in our telecoms prices if this sale goes through.

I'd be interested to hear from readers as to whether they think the sale of TelstraClear to Vodafone would be a good thing or a bad thing for consumers.

Please visit the sponsor!

Have your say on this...

PERMALINK to this column

Oh, and don't forget today's sci/tech news headlines

Rank This Aardvark Page

Change Font