Two Degrees: co-lo go-slow cost us $37m; will hit 40% target
Responding to unusually pointed Commerce Commission criticism, the third mobile operator says it has been hurt by co-location delays more than anyone – and that it can still hit its target for installing its own gear on Telecom, Vodafone and Woosh towers at 40% of its cell sites.
"We share the commission's disappointment," Two Degrees' chief executive Mike Reynolds says. "The premise that we would try to do fewer co-locations rather than more is ridiculous. It’s faster and cheaper so for anybody to suggest we have purposely tried to do less is idiotic."
Last week, a June 2 letter from the commission to Two Degrees was made public.
The letter, from commissioner Anita Mazzoleni to Two Degrees’ chief executive Mike Reynolds, uses unusually blunt language by the standards of her organisation.
In it, Ms Mazzoleni expresses her annoyance that the commission spent two years fighting for Two Degrees’ right to install its gear on rivals’ cell towers – only to see the budding third mobile operator largely ignore the cost-saving opportunity afforded by its co-location ruling, issued in December.
Of its network of 400 or so cell towers in Auckland, Wellington and Christchurch, Two Degrees has only co-located on four sites (all towers owned by Telecom, NBR understands). In all other instances, it has built its own towers.
Telecom and Vodafone insiders also expressed their bafflement that they had spent “millions” preparing for sites for co-location with Two Degrees, at the behest of the commission, only to see the telco fail to turn up at the co-lo party.
Two degrees responds to its scolding
A Two Degrees’ spokeswoman says the cost of building its own towers has added $37 million to the telco’s network build costs, says a spokeswoman - $20 million in capital cost difference over co-location (or “co-lo”), and $10 million in delays to its launch (now scheduled for August).
So why didn’t Two Degrees’ take the option to co-locate?
Chief executive Mike Reynolds says by the time the commission’s determination on co-lo came through, in December, it was too late. His company was already well into its build across Auckland, Wellington and Christchurch.
Separate from the commission's regulatory effort, Two Degrees also tried to reach a co-location deal directly with Telecom and Vodafone through the Telecommunications Carriers Forum, Mr Reynolds says, but talks broke down in March 2008. Last week, Two Degrees resigned from the self-regulatory body, which another manager dubbed the Telecommunications Cartel Forum.
Mr Reynolds’ also reiterated his companies’ frequent criticism of the Resource Management Act.
Two Degrees’ original business plan called for 39% of its cell towers to use the cheaper co-location option.
But the RMA keeps cell towers in New Zealand around 10m shorter than towers in Europe (where co-location is commonplace). At many sites, there simply isn’t room for Two Degrees’ gear.
Combined with the timing of the commission’s ruling, this meant Two Degrees simply could not co-locate at more than four sites.
What's new?
But haven’t the limitations of the RMA, and our dwarf towers, always been a known factor?
Yes, says Mr Reynolds.
The bit everyone is not getting, he says, is that Two Degrees’ business plan calls for it to collocate in 39% to 40% of instances nationwide.
After the telco’s August launch, its customers will use Two Degrees’ own network in Auckland, Wellington and Christchurch but roam (invisibly, to them) on Vodafone elsewhere.
But Two Degrees has always planned to have build its own network everywhere, Mr Reynolds says, and from August onward it will “incrementally expand” its cell tower roll-out.
Many of its post-August cell sites will be outside urban areas, says Mr Reynolds, where the RMA tends to have less restrictive cell site rules.
In many more instances, Two Degrees will be able to co-locate with Telecom, Vodafone or Woosh.
And once it has built its network New Zealand-wide (no target date is public), it will have hit its 40% co-lo target.
No big deal
In her June 2 letter to Mr Reynolds, the Commerce Commission’s Ms Mazzoleni also complained that Two Degrees was behind on regulatory filings, including a database of its cell sites. To underline the gravity of the situation, Ms Mazzoleni wrote that - although the commission did not plan it - High Court action would be an option if the telco did not fulfil its obligations by June 5.
Mr Reynolds said Ms Mazzoleni made a valid point, but played down the issue. “We forgot to dot a few i’s and cross a few t’s. It's no big deal.
Two Degrees has spent more than $200,000 on its co-lo database, Mr Reynolds says.
A spokeswoman for the commission said it had no further comment beyond the statements made in its letter (which can be read here), bar that Two Degrees did meet its June 5 extended deadline.
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Comments
we need that 3rd mobile telco now!
Extraordinary amount of aggression coming from Vodafone at the moment - they're clearly worried about the pending competition.
more garbage from Vodafone
I agree Jim. It is a competitive market, and no one would expect Vodafone and Telecom to play anything but hardball when the law allows them to.
But it's another thing to then turn around and spout the following disingenuous crap that came from Vodafone on Friday:
“It is outrageous for 2 Degrees to blame Telecom and Vodafone for delays in the process when it is 2 Degrees which has repeatedly turned down offers of co-location.”
"we have bent over backwards to give 2 Degrees co-location on its towers, but none of the sites offered have been taken up to date."
there is a reason for that Paul, which you well know....
Telecom silent after XT....
Is that their only big shot of the year.....
No seriously, Vodafone wants competition
Calm down Jim, all that Vodafone wants is a level playing field - 70% of the market is just too precarious. The international head office can't believe its luck that the lite regulators are so naive.
Keep up the good work boys with the disinformation.
Calm down you 2degrees
OK - so why don't you tell us when you roll out the next stage of the network? stop relying on Voda for your national coverage.
are NZ mobile calls expensive or not?
Can someone tell me whether or not our mobile calling rates are some of the highest in the world or not?
I hear conflicting versions of this from the telcos, which makes me suspicious.
Saint Vodafone to the rescue.....
I think there is far too much sarcastic commentary above on the true nature of Vodafone's offer to the NZ market. They're playing within the rules, so if they can fleece us, why shouldn't they?
Vodafone admits their plans r too complicated!
I got a letter from Vodafone with my last invoice, which basically admits that their calling plans have been too complicated!!
Can you believe it!! there's nothing like looming competition to focus the mind. They've had it easy for too long.
Bring on 2degrees in August !
Yes, NZ calling rates r way too expensive
re: 10.19
It depends who you talk to.
Vodafone very cleverly point to a meaningless 3 minute average call duration which puts NZ somewhere in the middle of the OECD.
However, most mobile calls are no where near that long; and when you compare NZ for 20 second calls, which is more realistic, we have the most expensive mobile phone call rates in the world by miles!
And nether Telecom or Vodafone will deny it.
those 116 sites Vodafone offered 2degrees...
That quote from Paul Brislan of Vodafone in 10.04am.
I wonder if Paul can tell us how many of those sites offered in 2008 by Vodafone were actually located in Auckland, Wellington and Christchurch, where 2degrees started building their network?
If it turns out that there were very few among that 116 - will Paul Brislan apologise to New Zealand?
LOL. Anyway don't expect NZ
LOL. Anyway don't expect NZ to have cheaper calls and data rate. Stop day dreaming.
NZ, one of the last with only 2 mobile telcos?
Is it true there are only four countries left in the world, including NZ, that only have two mobile telcos? and everyone else has more?
(the other three are in Africa apparently....)
response to "are NZ mobile calls expensive or not"
Put it this way. I live in Sydney and was in Auckland this week, I used to work for Telecom NZ several years ago.
Simple comparison for you if you spend $30-$40 per month on your mobile...
Vodafone NZ prepay. 89c per minute, recharge with $30, get $30 credit.
Vodafone Australia prepay "Flexi caps". 88c per minute, recharge with $29, get $300 credit. ($150 to use for anything, $150 to use for VF to VF calls).
So tell me, what do you think? 4-10x the price? NZ mobile offers are a joke - Vodafone and Telecom need to wake up. And please don't tell me the NZ population is too small and the geography too big!! Yes - Australia does have 5x the population. However it also has 28x the land mass and higher labour costs.
Somalia, Niger and Sierra Leone......
10.52: Yep! And the three other countries NZ mixes with are mentioned above!
We have had this cosy duopoloy between Telecom and Vodafone for far too long.
Bring on the competition!
2 Degrees
Jim - do you really believe that once 2 degrees are up and running, they will offer significantly lower charges? Look at the Oil companies... 2degrees will need to be a volume service to be able to offer good reductions, and with the limited coverage that may be difficult. However, one lives in hope...
OECD rankings
New Zealand ranks in the cheap half of the OECD for mobile phone calls. All this crap about how expensive we are for a thirty second call versus a two minute call is rubbish. I pay $30 a month and get a good service for it. I don't want all the bells and whistles and so I don't pay for it but there are those that do want it.
Two degrees - launch your service and then we can talk about whether you're any good or not. So far you've been talking about it for a decade. Pull your finger out and stop blaming everyone else.
are you kidding me?!
rank - are you working for Vodafone NZ or Telecom? You are dreaming if you think NZ prices are "cheap"!! Have you ever visited the UK or Australia, or anywhere in Europe?
Vodafone and Telecom are milking the NZ market dry with their extortionate pricing. Read my previous posting for a relatively simple price comparison. Another comparison - NZ 89c per minute on Prepay. AT&T USA - US$1 PER DAY for unlimited calls throughout their network (or US$3 nationwide) - only pay on the days you use it. Yes - of course USA will be cheaper, but your NZ bill will be 10-200 times more expensive than this if you make more than a small number of calls.
And to Anonymous - yes - 2 Degrees will have to be significantly cheaper than Telecom or Vodafone to gain traction. Remember - they have NO market share, no revenue to lose... if they are only 10% cheaper, very few people will bother swapping networks. Mark my words - you will see prices 30-50% cheaper at a minimum - and these will continue to go lower over the coming years as they complete their network build out.
Any other Vodafone employees want to chip in that the mobile calling prices in NZ are "cheap"?!!!
Vodafone: NZ calls r cheap, so it must be true
Hi Rank Vodafone at 12.37pm, so basically you're not denying that NZ has the most expensive calls at 20 second duration?
Thought so! rest my case!
NZ is cheaper than Somalia, so there!
According to the most impeccably objective research, Vodafone can assure us that when you round up the call duration to 11 minutes, NZ is definitely cheaper than Somalia. So stop complaining!
most expensive calls at any duration
I have to laugh - most expensive calls at 20 second duration. Last time I checked (Saturday morning when in Auckland), NZ has the most expensive mobile calls for ANY duration!
I pay 5c per minute to call NZ landlines from my Aus mobile phone. Billed per second, from the first second. This isn't a dodgy calling card thing - this is calling direct on my mobile!
Another comparison - 60 minute call to NZ landline from Vodafone or Telecom Prepay = $53.40. 60 minute call to NZ landline from Three mobile (Australia) Prepay (or plan) using Talk International - AU$3 (NZ$3.80). So New Zealand is 14 times more expensive in this example. Short calls, long calls - it is all a bloody rip off in NZ. NZers deserve better.
C'mon 2 Degrees - we're all hoping you can beat the "cheap" pricing currently available in New Zealand.
Go Voda!
Vodafone NZ ranks near the top in the world for clever machialvellian propaganda
who pays that much FFS?
I pay $6 a month and I can call and TXT as much as i like.
it's called VOIP.
dorks.
Mobile VOIP?
How can you pay $6 per month and call and TXT as much as you like? Keen to know more about this. I have a great VoIP setup at home, but this sounds incredibly cheap for calling and texting from a mobile phone.
For Mobile VoIP that sounds impossible in NZ, it's about $60 for 1GB of data, so I can't quite figure out how you can only pay $6 to call NZ landlines from your mobile phone. If you're talking about from a fixed location - forget it - compare apples with apples please!
And as to "who pays that much FFS" - I imagine only the very wealthy or very stupid. Which is my most mobile calls in New Zealand are only a minute in duration.
update on slippery Vodafone misinformation
Mr Brislan of Vodafone really went OTT on Friday, aggressively overplaying his hand. It turns out that the vast majority of those 116 sites he claims Vodafone offered 2degrees were next to useless for co-location (eg: lots of lamp posts which can't be used; too much interference, and most were outside the 3 centres where 2degrees were building last year).
Yeh, NZ call charges r cheap; that's why we text!
Why do we text if calling is so cheap?
re: OTT
Hi anonymous (if I can call you that), those 116 sites were all chosen by NZC/Two Degrees. They weren't "next to useless" they were the ones that NZC/Two Degrees wanted.
Cheers
Paul
I don't think so Paul, check your facts
But thanks Paul for toning down the language from last week. Credit where it's due.
Competition
Hurry up and launch 2 degrees I will have no hesitation signing up.
Have had a gutsful of high prices and arrogance from the current incumbents.
Co-Location
2degree has also co-located with Woosh Wireless. One example of this is the Onehunga site. 2degree also shares some buildings with Telecom -- although I'm sure they dealt directly with the landlord rather than Telecom. An example of this would be the Kohimarama site. It is all rather disappointing though, however 2degree shouldn't take the blame -- Woosh Wireless isn't much better after all.
NZ telco and ISP prices?
do you know what people do to villagers?
they indirectly take villagers as fools, rip them off, milk their women dry and brainwash their children into slaves.
vodafone/telecom etc isp = RIPOFF.
i would say this, believe it or not, new zealand telco are sharks.
if you wanna compare rates etc, put the world wide prices and compare them. Local and international calls etc.
VoIP is the way to go. you wanna call alot? get an unlimited plan and go VoIP. screw telco's.
if 2degrees can do 10c per minute and 1c per text, vodafone/telecom can roll up their red carpets and live in a cave =P
"imagine everyone putting vodafone/telecom etc simcard into the shredder lol."
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