Vodafone set to acquire TelstraClear – a ‘cosy duopoly’?

16 July 2012

BusinessIn the 36 hours since Vodafone announced its intention to acquire TelstraClear there has been a flurry of conflicting opinions regarding the potential impact on the NZ telecoms market.  Pundits’ opinion on the consumer impact of this move has ranged from there being a ‘limited’ impact to predicted price decreases and Consumer NZ’s view that a beefed up Vodafone offering could actually act to drive Telecom’s prices up.

So, while the decision whether or not to let the sale go ahead sits with the New Zealand Commerce Commission, Overseas Investment Office and the Ministry of Business, Innovation and Employment – it’s worth considering the other impacts that this potential duopoly could have on our telecoms market?

What does it mean for smaller niche players trying to break into emerging markets?  How can they compete with a couple of monsters who can bundle services in a way that a niche player’s offering can’t possibly match?  This is how Microsoft destroyed web browser providers in the 1990’s (whatever happened to Netscape and its Navigator product?)

Having another full service provider in the market could certainly make things simpler for the consumer.  It’s convenient to get all your bills from one supplier, have one customer service department to deal with and have one other competitive price offer to benchmark your bills against.

However, if we step back and look at it from a wider perspective, what impact will this acquisition have on the speed of new products and innovation in the NZ market?  A market that’s a cosy duopoly with no agile innovators nipping at the big players’ heels could become sluggish and complacent.

A final thought.  Now that Vodafone has such a powerful set of services and all the cash that comes with being a global multinational – will we come to regret the concerted efforts by Government to clip Telecom’s wings?