People power puts telcos in their place

One of my favourite TV classics from my childhood was Citizen Smith.

A young Robert Lindsay played a revolutionary, and his catchphrase was, "Power to the people!"

I thought of this when I saw the reaction to the New Zealand Commerce Commission's decision to slash mobile termination rates last week.

At first, the telcos were not playing ball, saying that lower termination rates would not mean lower calling prices.

The argument was simply that these rates involved circulating money around from one phone company to another and back, and there would be no impact on a telco's bottom line.

However, people in New Zealand have had enough of the country's high mobile rates, which has put mobile voice traffic on par with Third World countries.

The gulf between on-net and off-net pricing also explains why New Zealand has 4.7 million mobile accounts for a population of just 4.3 million — many people have accounts with two or more telcos, to take advantage of substantially cheaper on-net rates.

Huge regional variations arose as some towns are dominated by Telecom and others by Vodafone, with people ringing their "Best Mates" using a particular telco.

After last week's Commerce Commission decision, a campaign began calling for people to ring their telcos and ask for a better deal or they would take their custom elsewhere, citing the move on MTR rates, which are now much lower than Australia's.

And lo and behold, Telstra Clear broke ranks and reduced its calling rates on Friday.

Given this, and given the fact that the telco market, which had been dominated by main players Telecom and Vodafone, now has 2 Degrees plus ten or so other companies, we are beginning to see real competition in the New Zealand marketplace.

As Citizen Smith cried all those years ago, "Power to the people!"