Vodafone undertaking offers a real alternative

, posted: 2-Oct-2009 19:00


Vodafone undertaking offers a real alternative






Today, Vodafone has tabled a new undertaking designed to be a real alternative to regulation of mobile termination services. 

While Vodafone continues to disagree with the need to overrule existing mobile termination rate (MTR)  commercial agreements and disputes the claimed benefits of this intervention, Vodafone is working hard to address the Commission’s concerns and is confident the new undertaking will deliver benefits well ahead of any regulation which will take a further year to implement.

Vodafone’s General Manager of Corporate Affairs, Tom Chignell, says Vodafone wants a solution in place so the company can get on with competing and delivering great value to our customers.

“Our undertaking provides wholesale termination rates of 1.2 cents on TXT and 12 cents on voice from April 2010 with a glide-path down to 3 cents for voice.  This will take our rates well below those in Australia, the UK and Ireland. The TXT rate is dramatically lower than most OECD markets.”  
 
The impact on Vodafone’s business cannot be overstated.  The reduction in price for TXT is an 87% drop and in voice is 20% in the first year and a further 12.5% in the following nine months, building to a massive 80% drop in voice termination rates by year five.

“This reduces our wholesale revenues by $50m in the first year, growing to more than $450 million over five years against prevailing rates. This is a material reduction for any business to absorb and will impact on Vodafone’s ability to invest in solutions for our customers.

“Let us be clear: Vodafone does not expect there will be retail price reductions as a result of these changes or from the proposed regulation. Indeed, we expect low-spend Prepay customers may be made worse off. Potential benefit for customers will only be delivered to fixed customers and even then only if fixed operators choose to pass on these savings to their customers.

“Vodafone intends to pass on these savings to its fixed calling customers and challenges other fixed operators to make similar commitments to back up their submissions to the Commission,” says Chignell.

Ends -

This is really significant I think. Not only are we offering a rate that's better than the Commission's model but we're offering it from April next year, not in 2011 when any regulation will be finalised.

Plus for us as a company it builds in certainty through the glide path. That's critically important because these are some serious numbers we're talking about.





Other related posts:
Of termination rates and regulatory holidays
Minister recommends regulation - Vodafone's response
Vodafone's response to the Commerce Commission's report








Comment by Lena, on 2-Oct-2009 19:31

It's about time telco's listen to customers and delivery real value.


Comment by simon14, on 2-Oct-2009 23:07

Nice job overall, however I have a few questions.

Why does Vodafone expect low-spend Prepay customers to be made worse off with lower MTR’s?

Also, with regards to this comment:

“Potential benefit for customers will only be delivered to fixed customers and even then only if fixed operators choose to pass on these savings to their customers.”

I fail to see why Vodafone concludes that fixed line operators won’t or may not pass on any savings as a result of  lower MTR’s? There is PLENTY of competition in the fixed line tolls market and it will only take one operator to lower their prices to force everyone else in the market to follow suit. Not to mention, if ones fixed costs decrease, naturally the end consumer will benefit, especially in a competitive market!


Author's note by jointhedebate, on 3-Oct-2009 11:25

Hi Simon,

Let's start with pass through. I've got another post on that on this blog but in essence, pass through simply doesn't happen at the level the Commission has decided it will.

The Commission's model for fixed to mobile rates assumes a pass through of 80% rising to 100%. That is, every penny of the savings are passed on to customers - MTR drops by 10c so the retail price drops by 10c.

However, that rarely happens. In Europe, the average pass through rate is 50%. In the UK it's 65%. In Australia, Telstra's own records show it has passed through only 16% of MTR reductions.

Our economic expert (who has access to the information from each telco that submitted to the Commerce Commission) concluded pass through today in New Zealand is around 30-40%. This doesn't include Vodafone and Telecom - we have guaranteed 100% pass through in our Deeds of Undertaking (which will, if the Commission choses to regulate, cease to have effect in December this year).

So in a market where two of the largest operators pass through 100% the remainder of the market are happy to pocket the cash.

All that happens internationally is the fixed line operators make a larger margin.

Think about Australia. In the five years since MTRs began reducing in Australia the mobile market has contracted - from four network operators to three - while the fixed line market (with its higher margins due to MTR reductions - has not increased in competition at all. Telstra has pocketed the cash and gone out of its way to consolidate its lead in the market.

Have a look at the Covec report on pass through (section 3 I think it is) and you'll see what I'm talking about.

Now, the first part about low-spend customers.

Today our minimum spend is an annual top-up. That's $20 once a year. That customer doesn't need to spend any more than that at all to retain access to the service.

So let's take an extreme example - someone who buys a phone, tops up with $20 and then doesn't make a phone call or send a single TXT all year long.

That customer does, however, receive calls. Lots of calls. Several calls a day. And TXTs.

That customer is viable because we receive termination rates for every call that comes in and for every TXT that comes in. If you slash those rates, as the regulator wants to do, that income disappears. That customer becomes, in effect, uneconomic.

In the US, AT&T "fired" thousands of customers who called their help desk more than 30 times a month (that's daily) because they were costing too much.

In similar situations you'll see minimum monthly spends applied (that happens in NZ already - both TelstraClear on Telecom's network and 2Degrees require a minimum monthly spend - TelstraClear so you can continue to have service and 2Degrees so you can get the better calling rates). Others have introduced charges to receive calls.

Neither is ideal - and hopefully we can avoid them, but only if we get a glide path. Glide paths provide certainty. We know exactly what we're getting next year and the year after and the year after that. Without a glide path - the 'drop off a cliff' model - the upheaval is so great you end up with customers who are no longer adding anything to the network but are, instead, a drain on the network resources.

Hope that helps.

Cheers

Paul


Comment by Plasmaglow, on 4-Oct-2009 01:26

"2Degrees so you can get the better calling rates". I would hardly call that a requirement since if you don't the price is still half what vodafone charges. Requirement implies you HAVE to do it.

It really detracts my attention from the point if the article when I see inaccurate statements like this.


Comment by ajw, on 4-Oct-2009 08:55

Can't these Telco's understand english. The Commerce Commission wants an immediate reduction in FTM and MTM MTR's to 7.5 cents per minute. And texts to be terminated at 1 cent per txt.
It appears that both Vfone and Telecom have been dragging out the process and playing the Commerce Commission for a bunch of fools.
I don't know why the Commerce Commission and the Government continually put up with these delaying tactics and immediately regulate.
I note in Korea recently mobile companies drastically dropped pricing after being warned by the regulator to do so.


Author's note by jointhedebate, on 4-Oct-2009 09:24

@Plasmaglow, that was one example... see also TelstraClear and CallPlus. You pay a monthly fee for a minimum level of service. Currently Vodafone charges a minimum of $20 a year... that will have to change.

@ajw, this is the Commerce Commission's process. The Act allows for "undertakings" to be offered in lieu of regulation.

Telcos, and indeed most businesses, don't want regulation. Why? Just take a look at the TSO and you'll see what happens when a regulation that seems like a great idea at the time becomes a complete waste of time and money.

The Commerce Commission has done very little work on the costs of mobile to mobile and TXT in NZ. The only actual piece of work it's done has been on fixed to mobile, it made mistakes with that and Vodafone and Telecom and our economists have pointed out how dangerous the assumptions are.

None of which has meant a blind bit of difference to the Com Com. So we're kind of stuck - either put in an undertaking that gives us some control over the process (ie a glide path) or throw our toys out of the cot and refuse to play along.

We want this resolved as quickly as possible. The Com Com is the prosecutor but also the judge. There's no appeal process, there's no merit's review. We can point out errors in assumption and the CC doesn't have to take any notice at all. And it hasn't.

So we've offered an alternative. A very good alternative. Yes, you get the rates you want and better. You can have the rates you want in April next year for TXT but we need a glide path down to the rates you want (this, by the way, is how it's done just about everywhere else in the world).

Remember, the CC can recommend what it likes in December, but actual regulation won't come into effect until 2011. That's from the Commission's own report. We're offering better sooner and with someone the telcos can live with.

Cheers

Paul


Comment by ajw, on 4-Oct-2009 09:49

Paul
The Commerce Commission have not got it wrong when it comes to what the Termination rate should be. It is totally pathetic that this process has dragged on since 2004. This current inquiry was started in November of last year so don't say you haven't been warned. In regards Glide paths, you will note that European Telco's tried to recently overturn a decision made by the EU in 2007 to regulate mobile roaming rates. Have a look for yourself. You will also note that throughout Europe MTR"S will be capped at 0.003 Euro by December 2012.
http://ec.europa.eu/commission_barroso/reding/video/20090701/index_en.htm


Author's note by jointhedebate, on 5-Oct-2009 10:02

@ajw,

Couple of things:

1: the process has not "dragged on" since 2004. It was resolved in 2004 and the Commerce Commission reopened it late last year.

Secondly, The Commerce Commission might have it right, they might have it wrong, they might be barking mad. What they haven't done is proven any of what they're saying. They've made a number of claims and not substantiated any of them.

They've produced a cost model for FTM only (nothing for TXT, nothing for Mobile to Mobile and nothing for international originating mobile). In it there are a number of assumptions and there's no proof to back up any of them (eg pass through will mysteriously reach 100% with no explanation as to how).

Thirdly, glide paths are the standard around the world. Even the EU commissioner herself notes the need for certainty in this regard.

Take a look at "Ofcom and UK govt question EU" which points out there's a glidepath for MTRs... or for more reading on it, go to the source itself.


Comment by nzgeek, on 5-Oct-2009 13:36

I'd like to know why the "free-riders" (i.e. those who use their phones almost exclusively for incoming calls) are such a big problem in this mix. Surely they must account for only a very small percentage of all customers, and are probably evenly mixed amongst all networks.

Assuming that I'm correct, and that the termination rate covers the costs of connecting a call from another network, then surely the "free-riding" customers are simply a retail problem and not a wholesale problem. If these customers never make calls then their $20 balance gets absorbed by their provider and is pure profit. If that $20 balance is used during the year then surely there's a decent retail margin on the call/text costs to cover the costs of connecting that customer. Can it really cost that much to keep a "free-rider" connected if they're not using network bandwidth?


Author's note by jointhedebate, on 5-Oct-2009 14:01

Hi NZGeek,

good question but there are a lot of assumptions in there.

Let's take the extreme customer - someone who buys a phone, tops up once ($20) and doesn't spend another cent that year.

At the moment that customer can receive as many calls/TXTs as he or she likes. Let's say there's a call a day... five a week (working week) lasting 2 minutes each.

That customer is earning (currently, assuming 15cpm MTR) 30c/day for five days a week, that's $1.50 a week. Say 50 weeks each year, for a total of $75 on top of the original $20 in the year. $95 a year total.

Now, take away MTR entirely, and all we'll make is $20/year. That's a huge loss of revenue for a company to swallow without making some drastic changes.

Internationally that gap is made up with minimum monthly spend charges (say $20/month) or by charging customers to receive calls (!) or some other mechanism. Nowhere does it get ignored.

Our point is, there are plenty of people out there saying "Termination rates = wholesale therefore drop termination rates and retail rates will be lower" when in fact termination rates are what you have INSTEAD of retail rates.

It's a two-sided market. Income for the telco comes from both retail customer and interconnection. It's invisible to the retail customer but if you remove it, telcos will look to recoup costs. This is known as the waterbed effect and in its (limited) modelling, the Com Com says it expects the waterbed effect to be 50% (based on ... no evidence whatsoever).

That is, the telcos will see the loss of that $75/year but only attempt to recover half of that.

Given the example, that means we recoup $37.50 from that customer, effectively doubling what they're currently paying for the service.

That will lead to a number of low-spend customers leaving because the price is too high. We pointed this out and the Commission is fine with it.

In the US mobile growth has slowed recently and all but stopped at around 80% penetration because there's a raft of customers for whom cellphones are too expensive.

In NZ we don't have that problem - instead we're pressing on up past 100% and heading north (a lot further north if today's NBR story is anything to go by). Can't link for some reason:

http://www.nbr.co.nz/article/nz-mobile-subscriptions-will-hit-6m-2013-analyst-112303

In our Undertaking we say the impact of removing MTR to this level is around $450m. That's the cost of building out our 3G network to 97% population coverage.

Yet all that will do to your bill (assuming 100% pass through) is reduce the cost of calling a mobile from your landline from 63c/minute to 51c/minute.

Does anyone care enough about that drop in price?

Have a look at your landline bill - look at the number of calls you make to a mobile from your landline and see how much of a reduction will that 12c/minute drop be for you... I worked out my last bill to be a saving of about $3 a month.

Cheers

Paul


Comment by Chris, on 5-Oct-2009 14:51

@paul who cares if some customers use there phones only to receive calls/texts, It does not matter if they don't spend anything because the other party pays for the transmission. Why should any customer pay for people to call/text them?? it is not there fault people call them, and what about crank calls?
should a customer pay for those?? I'm sorry but I only support customers paying to receive calls if they are running a 0800,0508 number.

thanks


Author's note by jointhedebate, on 5-Oct-2009 15:00

Hi Chris,

the point is when they become uneconomic then businesses don't serve them. AT&T "fired" several thousand customers for being too expensive (they were calling the help line 40+ times a month). That's just one example.

What I'm saying is there will be a point at which customers who don't make many calls but receive lots become uneconomic and companies work hard not to have those customers on their books (either by making it too expensive for them or by changing their behaviour).

Expecting low-cost mobile services to become super-low cost because you've taken away another stream of income doesn't make any sense at all.


Comment by Chris, on 5-Oct-2009 15:27

@Paul whats this you are saying about not having as much funds to invest in upgrades?? Vodafone NZ are part of the Vodafone Giant with loads of cash are they not? or is Vodafone NZ a private company? and tell me - will you still be able to maintain the network you have if you have to cut costs?

If ya wanna cut costs why don't ya shutdown GSM and just run UMTS? I know y'all have a lot of customers using GSM but it would be one less network to maintain.


Cheers


Author's note by jointhedebate, on 5-Oct-2009 15:49

What I'm saying is we compete with other Vodafones for cash.

In our region we have NZ, Aus, the Middle East countries and ... India.

In India, Vodafone is building a network that adds as many celltowers as Vodafone NZ and Telecom NZ have nationwide every single month.

They add over a million customers a month.

So when we front up and say "can I borrow half a billion please" they compare our return with what they're going to get out of India.

So far, we've been ahead of that curve because we've had certainty (a five year deal in particular to reduce termination rates on a glide path). When governments go back on deals like that (after only 18 months) it makes investors VERY nervous.

I talked to our CFO about this the other day. He said there are two types of investment: core business and speculative.

Core business investment runs to things like: maintaining the existing network. Building out to cover main population centres etc.

Speculative stuff runs to things like: let's extend our 3G network out to 97% of the population.

When we announced that, Telecom had been building a 2G GSM network to 97% and 3G out only to 70% to match ours. That's the typical profile, by the way, around the world.

Because we were going out to 97% with 3G (the only Vodafone to reach that level I should point out), Telecom made the hard call to dump its GSM network and build out 3G to 97% as well.

That makes us the only country in the OECD to have TWO 3G networks out to that level. It's competition at its finest.

We couldn't have built out to that level without that speculative investment and that's the bit that will be missing going forward. We've always put our hand up to be first at everything in Vodafone (first with GPRS, first with 3G, first with HSPA, first with 97% coverage, first with HSPA+ etc). That's not going to be so easy from here on in.

Cheers

Paul


Comment by Chris, on 5-Oct-2009 16:13

depends on how much further the technology progresses I gess. And I'm sure it will keep going


Comment by Chris, on 5-Oct-2009 16:23

@Paul - Telecom building a 2G GSM network to 97% and 3G out only to 70%, I think they scrapped the idea of that and went for a pure 3G UMTS network to 97% because they knew they would save more money in the the long run cause the GSM will be phased out and they would then have to spend more money to get more UMTS. So now there investment can last longer between upgrades.


Author's note by jointhedebate, on 5-Oct-2009 16:28

Hi Chris,

Well, they were well down the track with a GSM network (they'd built it!) when we announced 3G to 97%. Sure enough, not long after they announced the dumping of 2G entirely, the staging back of 2100MHz and the increasing of 850MHz.

It's not common to dump an entire network prior to launch without first putting the odd customer on it.

So I'm going to take the credit for Vodafone making the call and Telecom matching and for New Zealand being the only OECD country to have TWO 3G networks that cover 97% of the population.

Without that speculative investment we'd have two 2G networks at that level and two 3G networks covering AK, WEL and CHCH (and a handful of other cities).

Cheers

Paul


Comment by wongtop, on 5-Oct-2009 16:43

Re India.

Last time I was in India the average retail mobile to mobile rate was 1 rupee/minute, within the same state the rate was even lower - that's NZ 3c/min or lower, retail.  I got an Indian SIM and it was significantly cheaper to call a NZ mobile from India than it was from NZ (circa 15c/min).

OK, the population density is high in India, but once you get to a certain density you need a certain amount of infrastructure to service the call capacity.

Even with the current proposals, the MTRs (wholesale) in NZ won't drop to the retail rates prevailing in India for 5 years or so.


Comment by Chris, on 5-Oct-2009 16:48

@Paul I know they had it built, Also what happand to it do you think? can they get there money back for it? was money wasted? these things we will never know. And Vodafone NZ have been cutting corners by not upgrading all of there cell sites to the fastest speed, some sites don't have the lastest cards in them....


Comment by ajw, on 5-Oct-2009 17:07

Give 2 Degrees another two years or so and they will have a nation wide GSN/UMTS/HSPA+ network.


Author's note by jointhedebate, on 5-Oct-2009 18:01

@ajw, that's never going to happen. Not unless 2D wins the lottery (and not a paltry $22m either).

@Chris I'm sure Telecom isn't out of pocket. It can take the hardware and upgrade the cards to 3G pretty easily I would think. As for Vodafone, we roll out network upgrades to the cities first, then that gear is rolled out to the towns, and so on down the line.

@wongtop, India has one billion people or more. You'll never see those rates in NZ while we have a population of 4 million.


Comment by ajw, on 5-Oct-2009 18:12

Author's note by jointhedebate, on 5-OCT-2009 18:01

@ajw, that's never going to happen. Not unless 2D wins the lottery (and not a paltry $22m either).

Paul

On numerous occassions you seemed to think that 2 Degrees would not launch. I say again, 2 degrees will have a nationwide GSM/UMTS/HSPA+ network within two years or so. You are clutching at straws if you think they will not be able to achieve this.


Comment by johnr, on 5-Oct-2009 18:32

@ajw are you kidding me 2 years and the rest............2D have already advised once that they may only build out to %80 of the population


Author's note by jointhedebate, on 5-Oct-2009 19:16

@ajw, I'm willing to be you a bottle of wine (not exceeding $30 in value) that not only will Two Degrees not build a "nationwide HSPA+ network within two years" but that they never build one.

Someone help me out here - what's the cost of building a network to that scale? $750m?

Let's say it's on par with Vodafone building out from 70% to 97% - so $500m.

That's double what Two Degrees has spent to date. And that amount isn't just on the network - that's everything. Marketing, salaries, cars, offices, HR, PR, the lot.

You're really expecting Two Degrees to turn around spend double that in the next two years on a network technology that's not one but two steps away from where they are today?

Two Degrees have, as JohnR points out, said they're looking to max out at 70% plus or minus a bit.

This is not a trivial upgrade cycle. It's a huge amount of money being invested in a country with a limited pool of customers growing at a modest rate. Four million people. Not 20m (cf Australia). Not 60m on a similar landmass as in the UK but four million and last I heard at current growth rates we'll never get to five million because we're not growing fast enough to replenish the stock.

Happy to be proven wrong. I think it would be excellent if we had three HSPA+ networks at 97% (actually, I don't. That would be a waste of money) but I will buy you that wine if/when it happens.

Speaking of which, someone owes me a dozen beer... no chance that'll happen, right?


Comment by ajw, on 5-Oct-2009 19:19

Comment by johnr, on 5-OCT-2009 18:32

@ajw are you kidding me 2 years and the rest............2D have already advised once that they may only build out to %80 of the population

Could you please direct me to this press release. 


Author's note by jointhedebate, on 5-Oct-2009 20:04

Hi AJW, how about here on NBR:

Network: 2G/3G Own infrastructure in Auckland, Wellington, Christchurch and Queenstown; customers will roam - invisibly, to them - on Vodafone’s network outside those areas. Nationwide network build promised; no time table

or in any of the analysts documents which you can't access without a subcription where they say they're aiming to build out to main centre coverage and no further at this time.

Now, how about you point to where they're saying they'll build a national 97% coverage HSPA+ network. All I've seen is Eric Hertz saying of course they'll do HSPA+ when they're good and ready (some time next year) but there's no mention of it being at 97% coverage.


Comment by johnr, on 5-Oct-2009 21:32

@AJW did you think I would make something like that up...Sorry I only use facts not sure what you are using but no way its facts


Comment by Chris, on 5-Oct-2009 21:36

@Paul Vodafone NZ have done there Network bulid but I know that not all the cell sits have the fastest 3G cards in them and thats after the Network build.... I would say your cutting corners**


Author's note by jointhedebate, on 6-Oct-2009 10:18

Hi Chris,

I think you'll find this is exactly how networks all over the world upgrade their coverage... it's only when a network is built fresh and new (a greenfields approach, as Telecom was able to do with its XT network) that the company rolls out a single footprint solution.

We offer the CBDs the fastest/latest speed and roll out the the equipment through the network from that point on.

Cheers

Paul


Comment by Chris, on 6-Oct-2009 10:52

@Paul So your saying that it is the norm that when a Cell Phone company says they are going to add HSPA+ for example that they don't usually upgrade all there cell Sites not even all the ones in the City's???


Because not all of Auckland has the fastest 3G cards...


Author's note by jointhedebate, on 6-Oct-2009 10:59

What I'm saying is exactly that - we roll out upgrades. We don't sneak out to every cellsite late at night and upgrade them all while no-one's watching... it's a progression, yes.

Cheers

Paul


Comment by chris, on 6-Oct-2009 11:05

@Paul Oh I see I thought that to cut corners you don't upgrade all the sites... I know it takes months, I just thought that when a Teleco says we are putting in HSPA+ and it would be finished on such and such a date that it means that all the Cell Sits will be upgraded...


Cheers Paul


Author's note by jointhedebate, on 6-Oct-2009 11:07

We invested $500m last year in the 3G Extend roll out alone.

No corners are being cut.

Cheers

Paul


Comment by ajw, on 6-Oct-2009 16:33

Hi AJW, how about here on NBR:


Comment by johnr, on 5-OCT-2009 21:32

@AJW did you think I would make something like that up...Sorry I only use facts not sure what you are using but no way its facts

You don't honestly think that 2 degrees are going to let their competitors know what their network plans are, do you, and how many customers they have with only two months since they launched.?

 


Comment by ajw, on 6-Oct-2009 18:45

Author's note by jointhedebate, on 5-OCT-2009 20:04

Hi AJW, how about here on NBR:


Comment by johnr, on 5-OCT-2009 21:32

@AJW did you think I would make something like that up...Sorry I only use facts not sure what you are using but no way its facts

Paul
I suggest you read some more news articles with all the time you have at your disposal. Please check out this link. Perhaps you could get your facts right by checking the press releases on Wikipedia.

 

2degrees has committed over $250 million to the network that will have 97% coverage of New Zealand, and is building a 2G and 3G network.

http://tvnz.co.nz/business-news/third-mobile-telco-rebrands-2degrees-2724433

http://en.wikipedia.org/wiki/2degrees

 


Author's note by jointhedebate, on 6-Oct-2009 19:02

AJW, first you say they won't tell anyone, then you say they DID tell everyone, and they told them on TV!

Seriously... if you get your tech news from TV no wonder you're confused.

Two Degrees gets 97% coverage today because it uses the Vodafone network.

It is not building a 97% HSPA+ network.


Comment by johnr, on 6-Oct-2009 21:44

@AJW 2D have to let Vodafone NZ know what is going on remember they use our network for national roaming! This requires interconnect points into each others live networks..which requires future planning for capacity.....


Comment by ajw, on 11-Oct-2009 18:45

Paul
http://www.nzherald.co.nz/technology/news/article.cfm?c_id=5&objectid=10592720
After reading this link perhaps you could comment.
According to its website, "it won't be long" until the switch is flicked on its 3G HSPA+ network capable of offering similar speeds to those experienced by broadband users in urban areas - around 4 megabits per second.


Author's note by jointhedebate, on 12-Oct-2009 09:02

Sure. It won't be long until it offers any 3G service at all...

And I have no doubts it'll offer HSPA+ service once it sorts out a 3G deal with Vodafone to roam on our network where it doesn't have coverage.

But is 2 Degrees going to build the 3G national network you claim? No, it is not and has never said it will. Nothing in that story changes that statement.


Comment by ajw, on 12-Oct-2009 16:34

jointhedebate, on 12-OCT-2009 09:02
But you told me they were not building a HSPA+ network.
You are in la la land if you think that 2 degrees is not going to continually expand it's GSM/UMTS/HSPA+ network footprint. And I am well aware that 2 degrees roams on the Vfone network outside the areas it does not have coverage.Why continually pay Vfone for termination, roaming and data charges.Why don't you shout yourself a $2 SIM card and check out the excellent, existing 2G GSM coverage in Auckland, Wellington, Christchurch, and Queenstown. Because of the extra revenue generated by inbound roaming it also makes more sense to roll their network out as quickly as possible.


Author's note by jointhedebate, on 12-Oct-2009 16:41

I think you need to go back up the page and re-read what I wrote.

Here, I'll help you out:

I'm willing to be you a bottle of wine (not exceeding $30 in value) that not only will Two Degrees not build a "nationwide HSPA+ network within two years" but that they never build one.

I know that building a network will give them greater control over the service and more income BUT it costs money and at no time has Two Degrees ever said they will build a nationwide HSPA+ network covering 97% of the population.

Most networks stop at around the 70% mark because any more than that requires an increasingly costly build (fewer customers per cellsite + more remote work locations + increased cost of backhaul = more cost/customer than is recoverable in a realistic timeframe).

Vodafone announced it would build out to 97% at a cost of $500m and Telecom followed suit (again at a similar cost). This is exceedingly rare and, in fact, New Zealand is the only country in the OECD to have two such networks.

cheers

Paul


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Paul Brislen
Auckland
New Zealand


You’ll have heard about mobile termination rates and how the Commerce Commission is investigating whether or not to regulate them. But what is a mobile termination rate, how does it work and why is it so important?

In this blog, we’ll try to answer your questions, tell you a bit about what we think and keep you up to date with the Commerce Commission and its process.


Recent comments

jointhedebate on Of termination rates and regulatory holidays: @StevenON, it's not MTR that introduces on-net/off-net pricing - it's marketing....

jjero on Of termination rates and regulatory holidays: You quote the amount of people in the public that think there won't be a substan...

grant_k on Of termination rates and regulatory holidays: This spectacle of Vodafone crying over spilt milk makes me about ready to puke.....

SteveON on Of termination rates and regulatory holidays: I spent a little time looking @ VF Ireland and am very surprised at their lack o...

jointhedebate on Of termination rates and regulatory holidays: @langi27 you're not required to read it - this is a place where we wanted to tal...

langi27 on Of termination rates and regulatory holidays: I don't understand why you continue to try to convince the public that your stil...

jointhedebate on Of termination rates and regulatory holidays: @rewa, that's a different kind of termination rate. You pay an early termination...

ockel on Of termination rates and regulatory holidays: @dannywii - the US is the biggest smartphone market in the world (by share - see...

rewa hard on Of termination rates and regulatory holidays: I agree with dannywii and I have had a number of corporate accounts with Vodafon...

jointhedebate on Of termination rates and regulatory holidays: In order:@myndlyz We have 49c/minute calling and we also offer $6/month call and...



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