2 Degrees faces two SIM challenge, says analyst

Third mobile operator announces aggressive pricing, business push comes later

New Zealand's new mobile network operator, 2 Degrees, has backed its popular teaser advertising campaign with aggressive launch prices, but market challenges still abound, says one analyst.

Today, 2 Degrees announced it was halving current prepay call rates, offering 44 cents a minute calls and nine cents a minute texts. It is also offering a range of other benefits, including free texts on top-up, on-network mobile to mobile calls at 22 cents and what it calls the best mobile to landline rate — also 22 cents.

But that set of prices could also pose challenges for the company, says IDC telecommunications analyst Rosalie Nelson.

2 Degrees' marketing manager Larrie Moore (left) and CEO Eric Hertz at today's launch, held at the new Dick Smith store in Auckland's downtown

Nelson says New Zealanders are very accustomed to on-network calling and text plans such as Vodafone's Best Mates. Those users could find 2 Degrees' per minute rates a challenge.

She says she thinks the plans could be attractive to people who make calls across networks, but that sets up the spectre of people using a second SIM, keeping their current deal and using 2 Degrees for calling off-network.

"2 Degrees needs incoming calls as well as outbound calls," she says.

That is to avoid being a net payer of mobile termination rates, fees telcos bill for terminating calls on each other's networks.

Nelson says she thinks the prepay mobile market is now unlikely to grow in value, just in the number of connections. She adds that it will be very hard to track real market share as SIMs, active and inactive, proliferate.

2 Degrees is offering 44 cent a minute calls to 21 countries and 144 cents to the rest. The same split applies to its 9 cents a text rate, with that moving to 20 cents outside the 21 country basket.

Voicemail calls cost 20 cents each.

Data is available at 50 cents per MB. Top speed is theoretically 7Mbit per second and, as with Vodafone and Telecom's new XT network, can be boosted to 21Mbit/s. However, om launch, 3G data is not available and data speeds are around 240kbit/s.

Business users looking for post-paid plans will have to wait.

CEO Eric Hertz 2 Degrees' launch is a "marathon, not a sprint".

"We want to really get started and get focussed where the need is greatest," he says, adding that tough times in the economy are part of that need.

2 Degrees will offer Nokia and Samsung phones on launch through a channel including supermarkets and gas stations. It says opening stores is also on the plan further out.

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