2degrees launches into residential broadband market

Promo hook-up with Sky TV's Neon | Petrie talks customer numbers after $27m deal.   2degrees boss Stewart Sherriff talks about today's announcement on NBR Radio and on demand on MyNBR Radio.

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2degrees has launched its first 2degrees-branded residential fixed-line broadband plans.

The new service comes on the heels of the telco's purchase of Snap. Up until now, the deal has been pitched as a way for 2degrees to snare business customers.

There are two home broadband plans: $69 a month with an 80GB data cap (matching the cheapest DSL and fibre plans from market leader Spark) or $89 for unlimited downloads (again matching the cheapest deal from Spark and others). Those who have a mobile with 2degrees save $10 a month.

2degrees says that price covers whatever is the best internet connection available for your address, be it DSL, VDSL (the fastest type of copper broadband) or UFB fibre. That's a leg up on most other ISPs, who typically charge a premium for VDSL.

Like Vodafone, 2degrees is dangling six months’ free access to Sky TV’s $20/month video streaming service Neon as bait to lure people to its unlimited plan (Vodafone also runs a Netflix promotion for its mobile customers).

All customers can bundle their home phone with New Zealand and Australian landline calls from $15 per month.

Fibre customers can “super-charge” a basic connection (30Mbit/s down, 10Mbit/s up to 100Mbit/s down/20Mbit/s up) for an extra $10 a month or 200Mbit/s in both directions for $50.

The connection fee is $99; a modem costs $149 plus $10 delivery. The connection and modem fees are waved if you sign up for a 12-month plan. The early termination charge is $249.

Enough speed for Netflix in 4K
Some ISPs have moved up the food chain from 30Mbit/s but former Snap boss Mark Petrie, who now heads 2degrees’ fixed-line division, tells NBR 30Mbit/s is all a household needs to smoothly stream Netflix in ultra high definition (4K) or high definition or Neon in standard definition (the Sky service’s maximum quality at this point). He notes both services are served locally (Snap, like CallPlus, Vodafone and others, has installed Netflix servers).

Mr Petrie says 30Mbit/s is modest by UFB standards in terms of raw speed and 2degrees' surveys indicated people were also attracted to fibre for other reasons such as reliability.

Customer numbers

He says 2degrees now has “north of 30,000” fixed-line broadband customers by dint of buying Snap.

Adding business customers, the total is “into the 40s” he tells NBR.

Chief executive Stewart Sherriff recently revealed 2degrees has a total of 1.3 million active customers. Mr Petrie says the company wants to move a "significant number" of those to 2degrees over the next 12 months. It will also target those outside its camp, given it can now offer mobile-landline bundles for the first time (the lack of which IDC previously identified as a barrier to growth).

2degrees bought Snap in a cash-and shares deal that industry rumour-mongers put at $27 million.

A recent Companies Office update shows Mr Petrie – who owned 100% of Snap – now owns 2.46% of 2degrees.

2degrees recently reported a net loss narrowed to $33.6 million in the 12 months to December 31, 2014, a slight improvement on the $35.9 million it lost in 2013. Revenue was $399.6 million, a 29% gain on the prior year's $308.7 million. On an ebitda basis, 2degrees was in the black to the tune of $58.0 million, a 29% improvement on the prior year's $45.3 million.

Further consolidation in the ISP market yesterday saw M2 mop up Woosh's customer base of 9000. The deal came soon after Vodafone bought WorldXChange, the last of the major independent players.

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