Telecom NZ to wholesale 3G network

Competition looks set to hot up in the New Zealand mobile market, with Telecom New Zealand announcing plans today to accelerate its wholesaling plans.
Written by Darren Greenwood, Contributor

Competition looks set to hot up in the New Zealand mobile market, with Telecom New Zealand announcing plans today to accelerate its wholesaling plans.

The network, which was launched as XT in May, will be available to wholesale customers by mid-2010, a year earlier than originally planned. Telecom's announcement had been foreshadowed on Friday after the company admitted XT sales has been slower than expected.

A statement from Telecom today named Digital Island as a partner, a supplier of telephony services to businesses, but others are expected to be announced before Christmas.

The move comes as the New Zealand Commerce Commission today announced that the arrival of third network supplier, 2degrees, into the New Zealand market had boosted competition and lowered prices, with some below the OECD average for the first time.

The Telecom statement today said Telecom has been trialling wholesaling mobile technology with Digital Island, which began offering a Telecom-based CDMA-based product in April 2009. Telecom wholesale general manager of marketing Nick Clarke said wholesaling the WCDMA network would give telecommunications retailers much greater choice of services, and the moving forward of wholesaling follows feedback from such retailers.

Telecom Wholesale spokesperson Nicole Walker told ZDNet.com.au that talks were underway with several other potential providers, but Digital Island was the only one Telecom could currently identify. She expected others would be announced before Christmas.

The impact of wholesaling would mean more choice and innovation with services, which should mean lower prices and benefit consumers. As for Telecom, the impact of wholesaling on it would be hard to say. "They (retailers) want to be part of this (XT) mobile network. Hopefully, they will take customers from other networks," Walker added.

Already Vodafone is losing sales as competition hots up.

Digital Island general manager Blair Stewart said his business already supplied several thousand medium-sized firms with telephony services. Offering the new XT network would be a "shot in the arm" for his firm, and he expected his client base to double by the end of 2010.

Existing wholesale ventures like Black & White, which used the Vodafone network, were aimed at consumers, while Digital Island offerings would target business. Stewart confirmed a soft-launch would start in April on the XT network, with a full-launch by mid-2010.

"Bundling services is a strong part of a telco offering," he told ZDNet.com.au. "We can bundle this with fixed voice data." Stewart said Digital Island's business model allows pricing 20 per cent lower than the mainstream competitors. He expects rival suppliers to also offer services from Telecom's WCDMA network but says this "can only be good for customers".

Indeed, the Commerce Commission's Market Monitoring Report, released today (PDF), noted the impact of added competition from third network 2degrees.

Previously, New Zealand came bottom of the OECD ranking of 30 on affordable prepay mobile plans, but it has since risen to 26th, in the six months ending 30 June.

Commentary for the months after said that following the arrival of 2degrees in August, for the first time in the Commission's analysis, New Zealand customers can access prepay mobile prices for less than the OECD average.

Prepay plans were important to New Zealanders as two-thirds of mobile users use them, said Telecommunications Commissioner Ross Patterson.

The building of technologically compatible mobile networks was also making it easier for users to switch between rival networks without changing phones. August and September saw more than triple the usual number switching to another network and taking their number with them.

The Commerce Commission also noted the take-up of broadband services grew 14 per cent over the year, with pricing similar to that of developed countries.

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