Mobile phone handsetA Commerce Commission investigation into mobile market competition is underway. The carriers think they’ve seen enough regulation, with some justification. And yet there are areas where New Zealand’s mobile market does not work as well as it might.

Spark managing director Simon Moutter has a point when he says New Zealand’s mobile market is competitive.

On the most obvious level, the mobile market works well. Prices for monthly accounts, calls and texts have fallen. Consumers pay less and get more.

New Zealand is no longer an expensive place to own a mobile phone. Cellular voice and text prices are in line with those in comparative overseas markets.

3degrees not lobbying for regulation

It speaks volumes that 2degrees is not asking for further market structure changes. The third carrier is profitable and continues to put price pressure on Spark and Vodafone.

2degrees CEO Stewart Sherriff says his company invented competition in New Zealand. His company has certainly made the mobile phone sector price competitive in a way that it wasn’t before.

Prices from the larger carriers didn’t start to fall in earnest until 2degrees got market traction. Sherriff’s company is often the first to move on price. 2degrees is innovative and aggressive when it comes to pricing bundles of mobile services.

In Moutter’s eyes, the tough price competition at this level is enough to prove the market works. Yet we could do better.

Where the market doesn’t work

There is one clear way New Zealand’s mobile market competition isn’t functioning as well as it might. Customer service is, at best, indifferent. Often it is appalling.

If the market was truly competitive, carriers would not be able to get away with leaving customers on hold for hours or failing to solve trivial technical problems.

That’s not something the Commerce Commission can address in a direct way. Complacency about customer service is a clear sign a market could be more competitive. We replaced a monopoly with a duopoly and then an oligopoly. From a consumer point of view: worst, worse and not good.

Areas the Commerce Commission should address

There are three areas the Commerce Commission needs to address in its mobile market review. All three have the potential to improve competition.

  • First, New Zealanders still pay too much for mobile data.
  • Second, there are warning signs of collusion between carriers that should worry the regulator.
  • Third and top of the list is the lack of diversity in mobile phone service retailers.

A lack of retailer diversity is the issue that triggered the mobile market review. Last year the then Communications Minister Simon Bridges wrote a letter about it to the Telecommunications Commissioner Stephen Gale.

Bridges writes:

“I note that submitters raised concerns about the effectiveness of regulation at the wholesale level, particularly with regard to the provision of Mobile Virtual Network Operator (MVNO) services. In other countries, these services are an important part of the mobile ecosystem, and the widespread availability of such services has led to better outcomes for consumers.”

Where are the MVNOs?

The lack of MVNOs in New Zealand is beyond debate. In many markets, these alternative carriers account for a large slice of the total market. Here MVNOs barely register.

It is theoretically possible there are no MVNOs in New Zealand because the market competition is already so perfect and the incumbents look after customer needs so well that there is no room for them.

That argument doesn’t stand up for a moment.

When is an MVNO not an MVNO?

New Zealand’s biggest MVNO isn’t really an MVNO at all. Spark’s Skinny business exists to give the nation’s largest telco a budget brand without cannibalising its core market. Skinny is not a true MVNO because its parent company owns the network.

Skinny is Spark lite. Today Skinny customers get almost the same product as Spark customers but without the value-adds like Wi-Fi hotspots and Spotify. Otherwise, the plans are a few dollars less each month than equivalent Spark plans.

In effect, Skinny is another Spark mobile product line.

The Warehouse

New Zealand’s next biggest MVNO is the 2degrees-Warehouse tie-up. It is price competitive but hasn’t caused any waves in the market. The number of customers would be a rounding error on the numbers for the three big players.

The Warehouse isn’t pushing hard with its mobile option. If you walk into a store you’ll have to hunt to see where you can buy it and sales staff don’t seem motivated to emphasise it.

Vocus is New Zealand’s fourth largest telco. Unlike the three bigger telecom companies it doesn’t own a mobile network.

There are some Vocus MVNO customers, but not many. You could probably fit them all in a room. Vocus doesn’t make much money, if any from them and, like The Warehouse, it isn’t marketed.

Full telco service

In most other western countries a business like Vocus would be able to partner with a carrier and offer its customers a full telecommunications service including mobile. It would be able to bundle services and offer keen prices.

That’s not the case in New Zealand. Likewise, you can imagine other smaller telcos and even companies that dabble in telco like, say, TrustPower, would love to offer mobile as an add-on to power and broadband.

MVNOs perform two vital market functions. First, they often serve more specialist customer needs not catered for by the bigger players.

MVNOs are about choice

Second, they act as a pressure valve for the market. Many disgruntled customers leave one carrier only to find their new choice is just as annoying. The MVNOs give consumers a new set of choices.

Until MVNOs make up about ten percent of the market, preferably more, New Zealand does not have true mobile competition.

The Commerce Commission needs to look at the barriers to entry for MVNOs. If these are structural, then there is a need for new rules.

Skimpy data plans

The second sign that competition doesn’t work well in New Zealand’s mobile market is the skimpy mobile data plans on offer. In recent months carriers have begun selling what they call unlimited data, but the small print makes it clear they are anything but unlimited.

We pay a lot for mobile data. This is especially true when you look at data-only plans. We pay a lot more than, say, Australia.

On the other side of the Tasman, you can pay A$65 a month for 50GB of mobile data. In the UK £25 buys 100GB of mobile data. That’s around NZ$50.

At the time of writing the best deal in New Zealand is 2degree’s 25GB for NZ$70. That’s roughly twice the price Australians pay and, depending on exchange rates and taxes, around five times the UK price.

Economy of scale

While you can argue that Australia and the UK have economies of scale, it’s hard to imagine scale means the cost of supply in New Zealand is twice that in Australia or five times that in the UK.

It is significant that the Australia data deal quoted above is from Amaysim, a MVNO. These smaller MVNO players have put huge pressure on the prices charged by the network owners for data.

There’s another way you can look at New Zealand’s mean mobile data caps. The competitive pressure in other countries means carriers dedicate their spectrum to satisfying the needs of mobile customers. If they don’t, someone else will.

Fixed wireless broadband

Spark mobile customers share the company’s cellular bandwidth with 100,000 fixed wireless broadband customers. If the mobile market was competitive, Spark could not afford to risk degrading the mobile data experience.

How Spark manages its resources is the company’s own affair. It is certainly possible to run fixed and mobile broadband on the same networks without disappointing either group of users — that happens in lots of countries. It’s possible there is enough spectrum to satisfy both groups.

Spark may have a good explanation why 100,000 fixed wireless customers downloading gigabytes each month have nothing to do with mobile market competition. But it’s something the Commerce Commission investigation needs to take into account.

Is there a cartel?

A third area the Commerce Commission needs to consider is something from left field. The three carriers have banded together to build a rural mobile network with shared infrastructure.

The Rural Connectivity Group is an intelligent and innovative solution to what looks like a tricky problem: delivering broadband to small remote communities and filling in the mobile blackspot on country roads.

While it makes sense for rivals to co-operate on a project of this nature, it isn’t without risk. In his book The Wealth of Nations Adam Smith wrote:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

Smith was no tin-foil hat conspiracy theorist, he is recognised as the father of modern capitalism. His name is forever tied to the ideas of free markets.

Rural Connectivity model

The danger with the RCG is that it could become the model for the next generation of mobile networks throughout New Zealand. There have already been whispers of the carriers considering acting together to build a 5G network.

When Chorus recently floated the idea of creating a UFB-style open access 5G mobile network the carriers were quick to shoot it down. A line hidden in a media statement from Vodafone could be interpreted as suggesting the carriers are thinking of building a shared 5G network:

There is no question that industry-wide collaboration makes sense in some instances, and the industry has already demonstrated working models for this.

You could see this as getting the regulator and others used to the idea of industry collaboration when it comes to 5G.

5G networks

Moutter takes the argument further. He starts by saying Spark can build a 5G network on its own:

No industry amalgamation was required for the transition from 3G to 4G, and none is required from 4G to 5G. Based on our current analysis, we think the investment for 5G will be manageable, as we will be able to leverage our existing 4G and 4.5G physical infrastructure.

Which sounds reasonable. He then goes on to say:

That’s not to rule out sensible infrastructure sharing where that can speed up deployment or address visual pollution issues that might come from the deployment of more network sites – we are supportive of those models. But to jump straight to a conclusion that we need a monopoly network would be crazy.

Sensible

Which could be another subtle softening up of the idea of a shared infrastructure. When you run a large partly vertically integrated business “sensible” can take on a lot of meanings.

As 5G networks are understood at the moment, they will need many more towers than today’s networks so the deployment issues and visual pollution he mentions are a given.

None of this is to say the carriers are planning to build a shared 5G network, nor is it to say the network structure will be inherently anticompetitive. It is something for a market regulator to consider and watch.

Competition or cartel?

It’s not the Commerce Commission’s job to second guess an as-yet-unsettled technology. Nor can it speculate about plans that may only be written on the back of paper napkins.

Yet it strains credulity to think the three carriers put their heads together to plan the RCG without at least mentioning how such a collaboration might work in the future.

At this point the Wikipedia definition of a cartel is useful:

A cartel is a group of apparently independent producers whose goal is to increase their collective profits by means of price fixing, limiting supply, or other restrictive practices. Cartels typically control selling prices, but some are organised to control the prices of purchased inputs.

No-one would suggest any of this is happening at present, but allowing the three carriers to build a shared network would be a step on the path to a potential cartel-like arrangement.

Mobile market competition issues ComCom should watch was first posted at billbennett.co.nz.

Mobile phone handsetPeople are paying more for phones. After years of falling prices, market research firm GfK reports the average price of a phone climbed seven percent in the last year. The number of phones sold worldwide climbed three percent during the year. Sales fell in North America and Western Europe.

GfK works with actual sales data rather than the shipments preferred by some analysts. This means the information is a more accurate reflection of consumer behaviour.

The clear pattern is that phone makers have switched focus towards more expensive premium smartphone models. Apple, Samsung and, most of all, Huawei all moved their customers upmarket. GfK says the premium features have become more important to customers.

What phone buyers want

They now look for: “water and dust protection, battery power and memory, high-resolution sound, camera and video capabilities, bezel-less design and even biometric sensors”.

Rising handset prices run counter to conventional technology hardware wisdom. The usual pattern is for prices to fall over time as manufacturers improve processes and wring out economies of scale. This is accelerated by new market entrants undercutting existing players.

The phone market has been running on a different track ever since Apple introduced the first iPhone a decade ago. For most of that time Apple has made almost all the industry’s profit despite having only a minority market share.

Aggressive phone prices

To a degree Apple’s rivals bought market share with aggressive discounting. That made sense to them during the growth years as people around the world bought their first smartphones.

It meant the phone business went through the usual economic cycle much faster than earlier technology waves. While it was always a competitive business, there were far few players than in, say, personal computer hardware.

There have been casualties along the way. Blackberry, Nokia and HTC were all roadkill on the route to today’s market.

Chasing margins

Now the phone makers, especially the Android phone makers, have turned their focus to margins and profitability. Hence the price rises. Apple pushed the bar higher again with its iPhone X which costs more than NZ$2000. Huawei has an even pricier phone.

Huawei is knocking on the door of Apple and Samsung. It aims to be the first Chinese company to be a global technology quality brand.

There’s still a way to go. The company’s products are excellent quality and contain as much innovation as brands like Samsung. Unlike Samsung, Huawei is on the whole more inclined to invest in engineering than in marketing budgets. That said, the company uses Scarlett Johansson in its advertising to great effect.

Huawei also teams with prestige brands. Its high-end phones use Leica camera lenses and its most expensive models have blingy Porsche designs.

Despite the company’s engineering prowess, Huawei has yet to master the art of looking after a customer after the sale. The biggest complaint you hear is that phone software is rarely, if ever, updated. That may be an issue that only concerns a certain market segment. Ironically, it is the market segment most likely to be drawn to advanced engineering.

Artificial intelligence

Huawei’s latest phone, the Mate 10, includes the kind of artificial intelligence features found in Apple and Samsung models. It’s ability to translate written languages feels almost like magic, or perhaps something from science fiction. In a similar vein, the phones take screenshots when you knock on the display with your knuckle.

For now, the sector’s move upmarket has created opportunities for mid-tier phone makers like Oppo. It’s another Chinese brand. Oppo sells an Android phone with about 90 percent of premium phone functionality for about 50 percent of the price.

Although Huawei would love to be seen as a serious rival to Apple, in truth the two address two quite different audiences. Few Apple iPhone owners would jump ship for a Mate 10. That’s not the case with Samsung customer, the two brands both use the same basic Android software and switching is relatively painless.

Phone prices rising as users move upmarket was first posted at billbennett.co.nz.

Huawei Mate 10Huawei’s marketing wants to tell you about the artificial intelligence features built into the Mate 10 phone. Its AI technology is impressive, but that’s not the best reason to choose the phone over its closest rivals.

The Huawei Mate 10 is a first-class Android phone that, at NZ$1100, also represents good value for money. There’s also a $1300 Mate 10 Pro model with a larger screen.

When it comes to performance, the Mate 10 is the match of anything from Samsung. On a good day the phone’s technology may even turn heads away from Apple’s iPhone.

The front of the phone has that now familiar all screen look. There are thin bezels at the side and minimal case sections surrounding the screen at the bottom and top of the front. It looks a lot like a Samsung Galaxy S8, but with fewer curves.

Modern look

It looks good and is distinctly modern. Yet it isn’t quite as pretty as the latest Samsung Galaxy S8 or the iPhone X. It feels better in the hand and has a higher quality finish than the cheaper Oppo range of phones.

You could say the same about the screen. It’s a 5.9-inch display with full HD. It looks great, but again, it isn’t quite as outstanding as the best from Samsung or Apple. Even so, the blacks are dark and the colours are vivid. Images are beautiful. You can view the screen from wide angles.

One thing Huawei shares in common with Samsung and Apple is that it makes its own chips. This gives all three an edge over their rivals. For the technically-minded, the Mate 10 has a Kirin 970 processor with eight cores. For the rest of us, that means powerful by phone standards.

It also means built-in artificial intelligence processing. That’s a must-have in a 2017 premium phone.

Fast

In practice the phone is fast. Apple phones always feel silky smooth in everyday performance, but some Androids struggle to keep up when pushed. The Huawei Mate 10 coped with everything a normal user might throw at a processor with aplomb.

Much of the phone’s artificial intelligence takes place in the background. The Mate 10 learns your behaviour, then queues the apps you’re most likely to choose next so they load faster. The AI also helps with photography.

Long, long battery life

The Mate 10’s superpower is battery life. According to the marketing material, there is a 4000 mAh high-density battery. This is more battery than you’ll find on most other phones. Huawei says it is the same amount of power as you’ll find on a tablet.

On top of that, Huawei has software that adapts battery use to the phone owner’s usage patterns to squeeze out even more life. Huawei says that means over a day’s heavy use and two days normal use. In testing it easily achieved those claims.

Typically the Mate 10 can go around 50 hours before needing a top-up. Many other Android phones struggle to get to 30 hours. For some people that is a good enough reason to buy a Mate 10 without looking at anything else.

Software, cameras, intelligence

Like Samsung, Huawei thinks it can improve on the raw Android software experience. It uses something called the Emotion UI. You can tinker with the software to a ridiculous degree and, if you prefer, can wind everything back so it looks like a straight Android phone. Tinker more and it can look like iOS.

Every premium phone maker will tell you they have the best camera. In a sense, they are all right. Each has its own pluses and minuses. If you are fussy about phone photography, you should spend your time researching and, where possible, testing the alternatives before choosing.

The Huawei Mate 10 Pro has the latest Leica dual camera. They’ve all been impressive, but this iteration is by far the best so far. The rear pairs a 12-megapixel colour camera with optical image stabilisation with a 20-megapixel monochrome camera.

Fast lenses

Both have fast f/1.6 lenses. The two work in tandem, the arrangement boosts detail and captures the best colour. It all works well in most lighting conditions.

This is where the artificial intelligence can come into play. The processor can detect the scene being shot and adjust settings accordingly.

It doesn’t always make the choices a skilled human might, but the results can be outstanding. The only negative is that the sheer number of shooting modes and photography features takes a lot of time to master. Far more time than a product review like this.

Huawei Mate 10 verdict

You are unlikely to be disappointed with any late 2017 premium phone. They are all good. The Mate 10 ticks most of the same boxes as its rivals but will leave you with hundreds of dollars in your pocket. On that basis alone it has to be considered.

The Mate 10 doesn’t have wireless charging, which is unlikely to be a deal breaker for most readers. On the plus side the long battery life means less emphasis on charging anyway. It also charges quickly, the battery goes to half a full charge in a little under 30 minutes.

Huawei Mate 10: Punchy, long battery life, artificial intelligence was first posted at billbennett.co.nz.

Nokia 3310 3GPhone nostalgia fans will love the new Nokia 3310 3G. The $100 phone looks like the old Nokia 3310 that was a hit in the first years of the 21st century.

It also sounds like an old school Nokia. The phone can play the famous Nokia theme at almost ear-splitting intensity. The phone maker has even included the famous Snake game.

While the phone has the Nokia brand, like other 2017 Nokia phones, it is made by a Finnish company called HMD Global which has a licence to use the name. HMD also makes the Nokia 8, an impressive mid-range Android phone.

Not the old Nokia 3310

While the new phone looks a lot like the original, it isn’t identical. The screen is bigger. There’s a camera. It’s not much of a camera, but enough to get by.

In place of the old proprietary pin style Nokia charger plug there’s a microUSB connection. You can charge this from a computer if you want.

The software is a reasonable emulation of the original Nokia 3310 phone software. I don’t remember there being as much colour last time around, but memory is hazy. It’s not hard to use, mainly because there are so few options.

If anything it’s the software that reminds us how far phones have come in the last 15 years.

Plastic

There is a distinct plastic feel. Although it seems flimsy in comparison with the original and with today’s premium phones, that’s not the case. The device seems robust. It’s probably better at taking knocks than a device costing the thick end of $2000.

The keys, especially the navigation key, can be tricky to use. But what do you expect? After all this is a $100 phone.

Which brings us to one of the glorious aspects of the revival: price. The 2017 version of the Nokia 3310 costs $100. That’s a fraction of the price of the original before taking inflation into account.

Another nice touch, the battery lasts far longer than ones on many expensive phones. HMD says the phone has 27 days standby time.

Would would buy this?

Not everyone wants a full featured smartphone. And there are many who would struggle to pay the asking price for a fancy top-of-the-line handset.

Some people only want a basic phone for simple tasks like calling and messaging. Then there are those who need a spare phone in a hurry because they lost or broke their main phone.

You might want something inexpensive to give a youngster on a night out or if someone works in a job where phones get destroyed. The long battery life makes it a great phone to take on a boat trip or a long bush walk.

The Nokia 3310 makes an ideal family back-up phone.

It took almost a year for the Nokia 3310 3G to reach New Zealand. An early version of the revived phone went on sale in the Northern Hemisphere in February. That model was so retro it couldn’t even use 3G networks.

The version that arrived in New Zealand in November has been updated to use the 3G network.

HMD says the phone is a Spark exclusive, but the red version shown in the photo above is only available from The Warehouse and Warehouse stationary.

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nokia 8 showing Zeiss lensA decade ago Nokia accounted for almost half the mobile phones in use. Within a handful of years it was irrelevant.

Today Nokia is back. Sort of. A little-known Finnish company called HMD Global has the name rights. HMD sells four Nokia models; the Nokia 3, 5, 6 and 8. Not much imagination went into those names.

The 3, 5 and 6 models are low-end Android phones. The Nokia 8 is the flagship, although at NZ$1000 it is up against other phone makers’ mid-range handsets.

Cameras, bothies

Nokia’s marketing makes much of the 8’s camera. The phone has one differentiating hardware feature that makes it stand out from the pack.

It can take pictures with the front and rear cameras at the same time. Nokia calls this ability the ‘bothie’. Yuck, more awful try-hard-to-be-cute-but-fail jargon.

No doubt the bothies feature will entrance some users. Others will see it as a gimmick.

Camera’s were always a big deal with the Nokia Lumia phones that used Microsoft Windows. Nokia’s problem is that every other phone maker also thinks flagship handset cameras are a big deal.

Zeiss inside

HMD worked with Carl Zeiss to develop the Nokia 8 cameras. Nokia worked with the same company for the Lumia phones.

There are two 13 megapixel camera sensors on the back of the phone. One shoots colour, the other monochrome. We’ve seen this before on the Huawei P10. There’s a two-colour flash and the aperture is f/2.0.

If you’re feeling arty, you can take monochrome shots. There’s also a bokeh mode, which is run of the mill on today’s phones.

The same 13MP colour sensor is on the front of the phone. Unlike most front facing cameras this one includes auto-focus. If you think this sounds familiar, we’ve seen it before on the Samsung S8. The Nokia 8 version is a little more polished, but we’re talking nuances here, not a great leap forward.

This is what delivers the ‘bothie’. Nokia’s marketing says the both allows you to tell the whole story. That is you can take photos and videos of yourself while also shooting whatever is on front of you.

Side by side

When using bothie mode, the two images appear side-by-side on the phone’s screen. In practice it’s isn’t easy to use. Using bothies is more work than most people like.

That’s not to say you can’t use this feature. Most buyers will try it once or twice then park it for later, which could mean never. The camera software doesn’t help. There are few settings for more advanced users. That’s strange because advanced users are the ones who will want to get to grips with the hardware.

On the plus side, the Nokia 8 has good quality sound recording. The marketing material refers to Nokia Ozo spatial 360 audio. Whatever that is. There are three built-in microphones. In theory you can add external ones, although I never found out how this works.

In practice you can record reasonable video of yourself with the front camera and microphones. I can see how that might work for me as a journalist if I wanted to do an on-the-spot report direct to-camera. It would work for someone making a video journal.

Nokia difference?

If HMD thinks the ‘bothie’ and the camera are different enough from what you find on rival premium smartphones, then good luck with that. In practice you can’t do much that you couldn’t do almost as well, even easier on a Samsung S series phone. Or on an iPhone. No doubt some people will master the Nokia technology and do wondrous things. Nine out of ten buyers won’t get close.

Nokia 8HMD has a much sounder and practical point of difference with the Nokia 8 software. This may sound contradictory when I tell you that HMD has, more or less, left Android alone. Most of the time you get a pure Android experience. There are no annoying overlays.

That in itself is a positive. There is an even more important reason for liking HMD’s hands-off approach to Android. It means you’ll get regular software updates.

This is a nightmare with most Android phones. Usually important software updates are late or never come at all. Apart from anything else, it means phones can become insecure. Not updating bugs and other flaws is dreadful, disrespectful customer service.

For this reason alone, the Nokia 8 is a good idea for anyone who wants a phone that is a serious work tool.

Nokia 8 is pure Android

But, as they say in advertisements, there’s more. The pure Android experience is better than you might think. If you’ve spent the last few years with TouchWiz, Emui or another overlay, it is a treat. There is no bloatware.

I was going to say there’s no rubbish software. But that’s not true. During the review pop-up messages asked me to rate the phone out of so many stars. There’s enough of that passive-aggressive nonsense from second-rate apps.

This undermines, but doesn’t invalidate, the pure Android claims. It is enough to put me off the new Nokia. You may feel otherwise.

Look, feel, hardware

The Nokia 8 looks and feels nice enough. It’s faintly retro, we’re talking two or three years here, not a throwback to Nokia’s glory days. Although if you are nostalgic for that, you can use the famous Nokia ring tone.

HMD hasn’t gone for the curved screen used by Samsung. Nor will you find the near zero bezels popular elsewhere. The camera lens does have a bump, but it’s not asymmetric like on the iPhones.

Ring tone aside, you won’t turn heads with the Nokia 8. It looks like a generic phone. The phone feels fine. It is light and thin in the hand. The review model is in a polished dark blue case. It isn’t water proof. The fingerprint sensor sits below the screen, which suits most people.

Nokia 8 verdict

HMD position the Nokia 8 as a premium Android phone. Yet it is well behind the best from rivals like Samsung, Huawei and Sony. It’s not a patch on this year’s or last year’s iPhones either.

It looks and feels more like a premium phone than most mid-range models. That is until you start using it. It’s a good phone, not a great one.

Which means it is another mid-range phone although prettier than most. Even so, at NZ$1000, it is one of the most expensive mid-range phones around. At NZ$800 it would be a sure-fire winner, without a price cut it is going to stay an also-ran. Nokia’s comeback looks unlikely to set the market on fire.

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