Telecom New Zealand has announced new data roaming flat-rate pricing that will begin 21 December and will apply in countries to which New Zealanders travel frequently. In Australia, postpaid subscribers will pay NZ $6.00 (US $5.00) per day for unlimited data service; in the US, UK, Canada, China, Hong Kong, Macau, Taiwan and Saudi Arabia, the rate will be NZ $10 (US $8.33) a day. In certain other markets, rates will not be flat, but discounts of 83 to 92 percent will be applied. In addition to the new data roaming rates, per-minute voice calling charges for Australia will be slashed by 35 percent, and discounts of up to 50 percent will be applied in some other markets. Prepaid customers will also get discounts, with data roaming cut by up to 88 percent and voice by up to 45 percent.

Tarifica’s Take

This aggressive rate-cutting by Telecom New Zealand is a perfect illustration of the substantial downward pressure on prices that currently exists within the mobile telecom industry worldwide. This pressure is caused by a number of factors, including growing competition from new entrants and the rise of alternatives to mobile operators’ services, such as those provided by OTT players like Google, Skype and WhatsApp. Given that these external pressures are not expected to abate any time soon, operators need to make sure their cost structures are in line with this new pricing reality.

One of the more powerful ways for an operator to lower its cost structure is to enter into a network sharing arrangement in which it can share network costs. In this case, two parties would reap the benefits of such cost savings. Another avenue down which some operators will travel is to sell towers. Implementing this approach will not only save an operator the costs associated with owning and managing the towers, but would also help to shore up its balance sheet. Having more cash and/or less debt is vital, given the high costs involved in rolling out next generation 4G/LTE networks.  However, such networks won’t just make an operator more competitive. Because these high-speed systems are much more efficient than previous networks, building them will enable providers to run their operations with fewer employees. In short, while there is an up-front cost to rolling out a 4G network, the increased efficiencies from doing so will create recurring and potentially large annual savings going forward.