DjShadow: ...I still personally would liked to of seen something new come out thats better than $10 text, they may instead just try to push more people onto plans.

indapie2000: Who cares, it's free txt!!! FREE!!! Meaning you don't pay anything, so it's got to be good.

retardinator:
I thought proper competition would have seen vodafone undercutting or matching Telecoms $10 txt deal...

sbiddle: Undercutting competitors on pricing doesn't do anything. How companies become successful is by creating a point of difference rather than getting involved in price wars. Unfortunately ulike the old days there aren't big points of difference between networks now except for handsets (but many might argue that as well).

Price wars will do either company little good, and the consumer will only gain in the short run.

If Vodafone was to undercut Telecom's $10TXT deal, then Telecom would undercut Vodafone’s deal, and so on, driving down revenues. If revenues where driven to the point of normal profit or even subnormal profit then Vodafone or Telecom may choose to exit the mobile market, now of course we all know that would not be good for consumers. This is the long run situation if a price war was to occur. In short innovation will win customers; price points only offer short term gains. Look at the retail market for oil, if Shell was to lower their prices today, then BP, Mobil etc would follow, they have to otherwise a logical consumer would purchase the petrol from Shell. Same thing applies here, to a point.

Cheers

I don't consider either company silly enough to put itself into a position of severe financial risk they too are conforming to the economic laws of supply and demand.  While saying that however I believe that there is more scope for competition in this industry. 

Lets say a pricewar does occur though and 'oh no' one does pull out of the market. So what? this leaves a gap for others to fill it's place. The company may sell the their network and equipment to competitors rather than having it sit idle, or other competitors may come and build a network of their own, econet for example (I think they are starting to build a network in auckland?).

The world already knows that New Zealand consumers are getting the short end of the stick (New Zealand's cellphone call prices are the highest of any country in the OECD - for crying out loud) the oppurtunity for international competitors to enter the market if Vodafone or Telecom pull out is there and they know it.

retardinator:

I don't consider either company silly enough to put itself into a position of severe financial risk they too are conforming to the economic laws of supply and demand.  

The world already knows that New Zealand consumers are getting the short end of the stick (New Zealand's cellphone call prices are the highest of any country in the OECD - for crying out loud) the oppurtunity for international competitors to enter the market if Vodafone or Telecom pull out is there and they know it.

retardinator: From my perspective there was no flaw in that argument, if a price war forces a competitor to fail, then good, as I hypothesise others will move in to take their place. I do however understand your perspective and respect that.

But you see that either Telco would not let this happen, as I have said a price was is not in the best interest of either Telco, and really not for the consumer. If one player was to leave the mobile market and another enter, all that really says is we could have had three players, but we still have two. I too believe in the principles of free market, where if a business fails through competition then so be it, which can happen when you have a one larger player and a few smaller players with the later usually having deeper pockets.

I am of the same opinion, however they were an example of a competitor building their own infrastructure…

ALASTA: It sounds as if you haven't actually read the article that you have linked to above.

ALASTA: Obviously the telephone text messaging market in New Zealand is not a monopoly but it is a duopoly…

ALASTA:…in which market efficiency falls somewhere between that of a monopoly and that of perfect competition.

ALASTA:It's reasonable to expect that our telecommunications pricing would be much higher than the OECD average, because New Zealand is so sparsely populated compared with European countries.

ALASTA: It's reasonable to expect that our telecommunications pricing would be much higher than the OECD average, because New Zealand is so sparsely populated compared with European countries.