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Why are NZers top txters? Well duh!

24 November 2008

On the weekend, the NZ Herald ran a story with the headline: Kiwi textaholics lead the world.

Was this really news?

Is it really a surprise to anyone?

In this article, the NZ Herald quotes Vodafone's Paul Brislen as saying: This contrasted with other markets such as the US, where "It's only in the past two years that they have even noticed texting exists".

So you might think "gosh, aren't Kiwis early adopters? Aren't we always living on the cutting edge of technology?"

But the answer would be a big fat "no".

We haven't embraced SMS messaging faster than the rest of the world because we're tech-savvy and technophiles.

Oh no... the reason why Kiwis are so keen on txting is far simpler.

It's because, given the outrageous rates that both Vodafone and Telecom charge customers for voice calls involving a mobile phone, SMS messages are the only real cost-effective way to use these devices.

With capped flat-rate SMS packages offering the only service that is remotely competitive with overseas mobile offerings, Kiwis have had no option but to use their thumbs instead of their voices.

This issue was first raised years ago, when NZ came very near the bottom of the entire world in terms of mobile call charges.

At the time, the Commerce Commission threatened to step in and regulate the market but after Telecom and Vodafone promised to play fair and re-jig their interconnect fees so that prices would fall they were left to do so.

But here we are, a whole lot later, and nothing has happened.

So the CC are again making noises about regulating things so as to provide Kiwis with a "world-class" mobile tariff structure.

But don't hold your breath.

The last National government was very much "hands-off" when it came to regulating Telecom and other telcos. They (in the form of ICT minister Maurice Williamson) stuck firmly to the "market forces" model -- something that has repeatedly failed to produce any useful results.

In fact, the current global financial crisis is pretty much a direct result of the failure of "market forces" to establish any kind of equilibrium.

So what fate awaits Kiwi mobile users?

Will we once again be left to bear the rorts of a savage duopoly that knows it has us by the short and curlies?

Or will the CC step in and bring some reason to the current outrageous pricing that both Vodafone and Telecom are inflicting on their mobile customers?

But why is it that we have such apparently good deals on SMS but lousy deals on voice calls?

Well that's really simple...

Voice calls are realtime communications. Any lack of bandwidth or other capacity in the network show up immediately as lost calls, bad quality or otherwise patchy service. If you over-sell your voice service you have really big problems because people notice very quickly that they're not getting adequate service.

SMS however, is a low-priority non-realtime service. TXTs aren't promised to be delivered in any specific timeframe and this kind of information can be considered a "background" task that simply takes advantage of any otherwise unused bandwidth.

In short, it takes a *lot* less investment in infrastructure to provide SMS messaging than it does to provide voice-calls. If your voice-call drops out or can't be established you get really pissed-off really quickly. If your TXT takes 10 minutes to be delivered you'd rarely even notice it.

Then consider the relative delivery cost of an TXT versus a voice-call...

A mere 160bytes of text can be fired from one end of the country to the other in a tiny fraction of a second, using under 200 bytes of data to generate up to 20c of revenue. Compare that to a voice call that requires an order of magnitude or more of bandwidth every second that someone is talking and which must be delivered with the absolute minimum of latency.

With voice-calls costing about 60c a minute and consuming hundreds of Kbytes during that same period, the telcos are earning far less from it than they do from their SMS traffic.

So here we are -- being outrageously rorted by both Vodafone and Telecom -- not only because our voice-call tariffs are amongst the highest in the world but also because those of us who pay 20c per TXT, just to say "ok" are effectively being charged up to $100,000 per megabyte for the privilege.

So, are Kiwi mobile users really "cutting edge" or just thick as two short planks?

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