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Mobile competition a $2 billion boost to economy - report

Mobile competition a $2 billion boost to economy - report
Increased competition in the mobile market has contributed $2.24 billion to New Zealand’s economy, according to a report released today.

The New Zealand telecommunications industry is benefiting from competitionIncreased competition in the mobile market has contributed $2.24 billion to New Zealand’s economy, according to a report released today.

Venture Consulting said competition, driven largely by 2degrees' entry into the market as a third operator, generated benefits in several ways: direct investment of capital and reinvested revenues, indirect investment through support of New Zealand businesses and the wider economy, and via a “competition dividend”.

The competition dividend reflects consumer savings through lower mobile voice pricing as a result of competition – an average saving of 21 percent since late 2007.

"We expect further benefits over the following 11 years (2011-2021) of $7.8 billion, bringing the total value of benefits to the New Zealand economy to at least $10.1 billion in today’s money. This investment will support more than 1,460 New Zealand FTE jobs," the report concluded.

"Vodafone and, to a lesser extent, Telecom have often reacted directly to increased or imminent competition and/or new plans and pricing offered by 2degrees. One example is the launch of top up bonuses on 2degrees' prepaid plans in August 2009. Shortly after this, in October 2009, Telecom introduced its own top up bonus on prepaid."

2degrees chief executive Eric Hertz said since launching two years ago, the company had made a "significant investment in New Zealand", the wider impact of which had not been quantified until now.

Hertz said the struggle to provide mobile competition had been a long, tough battle.

“Mobile competition is off to a great start, but is still developing," he said. 

"Upcoming issues such as the allocation of the digital dividend spectrum will have a big impact on the future state of mobile competition.”

The full report is available here.