MOBILE CONNECTIONS

Vodafone: 2,465,000 (46.71%)*
Telecom:  2,192,000 (41.54%)**
2degrees: 580,112 (10.99%)***
MVNOs: 40,000 (0.76%)****

* Vodafone PLC 2011 half-year financial report
** Telecom 2011 half-year financial report
*** 2degrees public announcement
**** Estimate based on MVNOs' comments to NBR. Mobile virtual network operators resell a wholesale service. Easily the largest is TelstraClear, with around 30,000 mobile customers using a rebadged version of Vodafone's network. Vodafone does not include MVNO numbers in its total.

2degrees said today that it had 580,112 customers (defined as anyone who made paid use of its network in the past 90 days, be it a call, txt or data session).

The new mobile carrier launched 19 months ago, in August 2009.

At its last update, it had 206,000 customers (defined as anyone who had made paid usee of its network in the past 60 days).

Chief executive Eric Hertz, who made the announcement, declined to give any figures on average revenue per user per month (arpu) or customer churn, making it impossible to discern how many 2degrees customers carry a second mobile (from Telecom or Vodafone) in their pocket, or have hopped back and fourth between the rival networks. He did say that most 2degrees customers are pre-pay.

2degrees estimated that mobile penetration in New Zealand now ran at 120%, Mr Hertz said. As well as dual phone owners, USB data sticks and new gadgets like iPads are boosting total connection numbers.

On the face of it, it seems most 2degrees customers have come from Vodafone, whose market share has hovered around 50% over the past decade (a compatible frequency, and Vodafone's higher share of pre-paid customers, has made it more vulnerable than Telecom).

Vodafone: 2degrees sucess proves further regulation unnecessary
"The message seems to be that 2degrees are doing exceptionally well - and doing so with mobile termination rates at levels which the commission claims are at least three times cost," Vodafone GM of corporate affairs Tom Chignell said.

Vodafone maintains that 2degrees success undermines its argument for regulation of mobile termination rates, and on-net pricing (discounts for calling customers on the same network), which it argues act as barriers to new entrants.

"Nice theory, shame about the evidence," Mr Chignell concluded after today's announcement.

Mobile termination rates (MTR) are what telcos charge each other when calls, or txts, cross between their networks. Communications Minister Steven Joyce has already decided that MTR should be regulated down; the Commerce Commission is now trying to decide by how much, and how soon.

At a Commerce Commission conference on MTR last week, Mr Chignell picked 2degrees customer numbers at 600,000. Today, Mr Chignell qestioned why 2degrees would wait until after the conference to reveal customer figures (2degrees told NBR it has always supplied the commission with data on customer numbers, even when not making it public).

2degrees - nope
Asked if the 580,112 customer figure - much higher than most had been predicting - validated rivals' claim that no more regulation was needed in areas like mobile termination rates and on-net pricing (discounts for calling customers on the same network), Mr Hertz disagreed. "It's not just about full customer numbers but how people use the network; how traffic flows around the network - influenced by mobile termination rates," he said.

Tuanz chief executive Paul Brislen agreed, telling NBR that MTR regulation was still needed.

Will MTR cuts be passed on to customers?
Asked by Tuanz chief executive if 2degrees would pass on Commerce Commission-regulated MTR cuts to its retail pricing (over which the watchdog has no control), Mr Hertz reiteraed his theme that people could expect more services for their money in a year's time, rather than spend less a month. 

See live blog below for more details.

11.18am: Wraps up.

11.16am: Question - how many 2degrees customers carry more than one mobile. Hertz: 50% higher than UK rate (whatever that is). Thinks total penetration in NZ is 120% - but that includes iPads, USB dongles etc.

11.15am: Question on churn (customer turnover). Hertz: Won't reveal, but claims is "better than average".

11.13am: Brislen asks if a home zone product is in the works (see original article below). Hertz: Won't pre-announce products; would benefit competitors.

11.12am: Paul Brislen, Tuanz: Will you pass on MTR cuts to retail. Hertz: Repeats his line that people will get more value for their dollar, rather than necessarily paying less per month.

11.09am: Question from NBR - Looks like Vodafone survey was right - your market share is higher than most people thought [and certainly higher than most analysts predicted]. Hertz: It's not just about full customer numbers but how people use the network; how traffic flows around the network - influenced by mobile termination rates.

11.08am: Won't reveal average per user per month revenue; when pressed things it could be "above average" (analysts from Goldman Sachs, Forsyth Barr will go away none the wiser).

11.07am: Customers defined as somone whose made a paid call, txt or data session in the past 90 days.

11.05am: Customer number is 580,112 - or about 1 in 8 New Zealanders.

11.04am: Hertz - data demand doubling every two months on 2degrees' network. First time offering real choice. Blah blah blah.

11.00am: CEO Eric Hertz on stage at the Auckland Town Hall. We now have over 400 employees in NZ. Ten branded company stories today; 40 by end of year. 

Reiterates commitment to opening Christchurch call centre; $100m investment for network upgrade (vendor financing from Huawai).

10.55am: A customer number will be announced. A rep just told me "it's a good number", but then he frowned when I told him some NBR readers are saying 500,000* (my pick is around 400,000 based on porting numbers). 

When 2degrees made its first customer announcement (206,000 customers or around 4% of the total market for mobile connnections), in February 2010, 50,000 people had ported a Telecom or Vodafone number to the newcomer.

Today, around 100,000 people have ported a number to 2degrees.

* Which turned out to be a good poker face; scroll up.

UPDATE: TUESDAY MARCH 22: Stay tuned for a live blog from 2degrees' announcement, starting 11am. 

And by all means keep adding comments below; some great suggestions.

FYI, in a classic case of interactive online synergy, I'll also be trying to redeem my $1 burger voucher from newly launched Treat Me around the same time (whoops, cancel that one. The deal closed today but the vouchers aren't valid until tomorrow).

MONDAY MARCH 21: 2degrees is making what it says will be a “major announcement” tomorrow.

I don’t know what that will be.

But here’s what I’d the company to do:

1. Introduce home zone plans. In mid-2009, 2degrees fought hard – and successfully - for the right to offer its customers so-called “home zone” plans (earlier, the Commerce Commission ruled in Vodafone’s favour in a similar case; in 2degrees’ case, just the threat of going down the same path proved enough to win the necessary interconnection concessions from Telecom).

A home zone plan is where you can make calls on your mobile at a landline rate when inside your home zone (which could be your actual home, or workplace).

It’s a pretty attractive scenario, especially for someone looking to ditch their voice landline.  Under Vodafone’s Local Zone plan, you can make local national calls on your mobile while inside your home zone for $20 a month (national calls cost 21 cents a minute).

2degrees ended up launching, in August 2009, without a home zone plan. I asked why, given that founder Tex Edwards had called Telecom a “bully-boy” for trying to block his company from the home zone market.

At the time, I was told it was concentrating on its core plans, which was fair enough. Now, the time seems right to spread its wings (when I asked Tex recently why home zone plans had yet to materialise, he had no immediate response).

2. Expand its Auckland, Wellington, Christchurch and Queenstown 3G data pricing nationwide. At the moment, 2degrees customers have to pay nosebleed charges when they travel outside those four areas.

3. Take a leadership position and slash 3G data pricing across the board.

4. Release customer numbers. 2degrees demands for regulation in areas like mobile termination rates and on-net pricing ring hollow when it refuses to reveal its market share. Is it more successful than it wants to let on, as a Vodafone survey alleges?

5. Expand its relatively narrow handset range. Admittedly, any Vodafone-compatible handset (bar BlackBeries) will run on 2degrees, but now it's got contract plans, it would be good to see a few more mobiles officially inside the 2degrees stable (with the attendant subsidies).

2degrees has done well, and whatever their carrier, everybody has benefitted from its entry into the market. But there’s room for improvement. Hopefully we’ll see some tomorrow.