2degrees comes out limply swinging

The long-awaited launch of New Zealand's newest mobile operator 2degrees took place this morning; but the offering isn't as hot as it could be by a long shot.

The long-awaited launch of New Zealand's newest mobile operator 2degrees took place this morning and we got some sharp calling rates — NZ44c/min to other networks, NZ22c on-net and to Telecom landlines.

Then there's NZ9.5c per SMS, which looks cheap compared to the usual extortionate NZ20c that Vodafone and Telecom likes to charge unless you pay in advance for larger volumes, and you get bonus value-adds for prepay SIM top-ups too. Retailers who sell the SIM cards will apparently get big rebates if the cards are topped up within 90 days, so I reckon they'll plug them hard.

But, as the National Business Review notes, the rest looks like a fizzer. No contracts, no 3G voice/data, only GPRS and EDGE support at NZ$500/gigabyte, and there's nothing much in there from 2degrees for businesses bar free GST receipts.

I'm guessing some existing Vodafone customers might get a 2degrees SIM (hint: now's the time to hit the NZ market with cheap dual-SIM phones), but the new entrant's offering doesn't look attractive and fully-featured enough to attract mass "churn".

With the launch done and dusted though, you can see why 2degrees made all that noise about mobile termination rates and besieged the regulator about it: it wanted to get the best possible deal with Vodafone. And, looking at the calling rates, 2degrees got a very sharp deal indeed, and with Telecom as well. I wouldn't be surprised if it pays both the big telcos less in termination rates than what the regulator, the Commerce Commission, is proposing.

A big question here is why 2degrees doesn't have per-second billing, when it made such a big fuss about it. The billing is per minute only, even though its wholesale deal with Vodafone allows for per-second toting up.

So, even though potential 2degrees customers are in two minds as to what's on the table, Vodafone must be laughing all the way to the bank. The UK mobile giant gets to earn a good dollar from 2degrees doing the bottom-feeding and aiming for low-value customers without risking much churn at all, especially of business users. Likewise, Telecom won't be worried and can concentrate on having a go at Vodafone.

Still though, this is only the first shot in the New Zealand mobile communications market battle. This week and next will be very interesting to watch, because the fight's only just started with 2degrees' rather limp swinging.


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