Mobile phone penetration in New Zealand has maxed out with enough phones in circulation for every man, woman and child but still the pressure is on for fancier phones, faster networks and more service providers to get in on the game.

In the June quarter Vodafone announced it had an overall subscriber base of 2.268 million, 168,000 more than the 2006 quarter, further consolidating its position as market leader ahead of Telecom’s 1,936 million customers.  

With the market at 110 percent saturation the only way forward is for carriers to increase coverage, bundle services including broadband and home line access, and lower the artificially high prices we’ve been paying for cell phone use.

The Commerce Commission has been engaged in a full scale investigation into the mobile market, unhappy that New Zealand’s access prices are among the highest in the developed world. It wants to see greater competition and is devising rules to allow competing carriers to co-locate equipment at each other’s cell sites to facilitate national roaming. Currently Slovakia is the only other OECD nation without a third mobile carrier.

Telecom mobile and Vodafone are engaged in an ongoing battle to build third generation, or 3G networks, which are faster and more suited to delivering location-based services, music downloads, video conferencing, TV and movie clips.

The underlying technological incompatibility between both major mobile networks is also being addressed. Sure you can talk, txt and pxt between them but you couldn’t change networks without changing phones and numbers prior to April this year. Now you can take your number with you and Telecom is building a hybrid component to its new network that is compatible with the Vodafone GSM standard.

TelstraClear has struck a reseller arrangement with Telecom for its new mobile service due to launch in the new year and Orcon, now owned by Kordia, will also launch its own mobile service from February essentially reselling Vodafone. It claims it will be much cheaper than rival carriers with a range of new services, ultimately including mobile TV. The long promised arrival of NZ Communications (formerly Econet) as another discount provider is expected to further fuel the mobile price wars.

Telecom, having invested more than $250 million in its mobile technology over the past three years, has now shut down its analogue 025 network. The $18.4 million Rev A upgrade to its existing 027 cellular broadband network is expected to provide 70 percent coverage of more populated areas by the end of 2007.  Customers with the appropriate data card can achieve maximum download speeds of 3.1Mbit/sec (average 800 kbit/sec) and uplinks of 1.8Mbit/sec.

Telecom’s new $300 million high-speed network, offering GSM/EDGE technology in rural and urban areas, and a full third generation wideband W-CDMA/HSPA service for the cities, are expected to go live late from 2008 and provide a more robust platform for 027 customers.

Vodafone’s $300 million wideband CDMA mobile network improvements will also go live late in 2008 delivering up to four times greater coverage. New rules giving all carriers access to Telecom’s phone lines, and Vodafone’s acquisition of Internet provider Ihug in late 2006, meant it was now offering the full bundle of fixed-line, broadband Internet and cellular services. 

The future of cellular was being glimpsed by the huge interest shown when Sky TV delivered eight channels of TV to Vodafone's 3G mobile customers and State-owned Kordia began trialing technology so mobile phones could act as fully functioning mini-TV sets.

Meanwhile all eyes are on the new contenders, impending regulatory changes, and what new services, handsets and price points might be offered – particularly for data transmission - as true cellular competition finally takes shape.