Vodafone unveils $12 plan

Possibly feeling the heat after 2degrees’ recent foray into on-net pricing, Vodafone has unveiled a new cut-price plan today.

The deal offers 200 minutes of landline and mobile calls a month for $12 (which works out to around six cents a minute).

Landline calls can be to any network, but mobile calls are only covered if they are made to fellow Vodafone customer (“on-net” in industry parlance) . Calls to XT or 2degrees customers will cost extra.

The plan is pre-pay only, but the company says an on-contract version is in the works.

Vodafone head of corporate communications Paul Brislen told NBR the move was part of an ongoing campaign to refocus customers on voice calls, which pre-dated 2degrees’ on-net push (a 10 cent a minute international call deal was introduced before Christmas.

“Kiwis don’t make a lot of voice calls anymore. They tend to only txt.”

Critics of the telco, including 2degrees and at times Tuanz, have claimed New Zealanders preference for txt is less a cultural cringe than a recoil at high voice charges.

2degrees' on-net deal
Last month, 2degrees introduced an on-set txt deal that sees 2degrees customers able to message each other for 2 cents an SMS (a catch: it only applies if you finish your monthly pre-pay allocation and "top up".

Similarly, voice calls to other 2degrees customers can be made for 22 cents a minute (again, if you've topped up), rather than the headline 44 cents a minute rate.

Aversion overcome
Previously, 2degrees has howled at on-net pricing (offering cheaper rates for calls or txts to those on the same network).

On-net plans like Vodafone’s Best Mates were anti-competitive, helping to lock out newcomers, said the new mobile operator - especially when ring-fenced by mobile termination rates (charges for calling other networks) that made it more expense to place calls to friends or family who belonged to a competitor.

You can only offer such on-net plans if you had critical mass, 2degrees argued, but by their very nature, plans like Best Mates, coupled with “high” termination rates, would deny its attempts to build a bulk customer base. 

Regardless: a world-beating launch
However, neither mobile termination rates nor on-net plans have, so far, proved much of a barrier to 2degrees’ success.

In February, the company announced it had secured 206,000 active customers (around 4.5% of the mobile market) in its first 180 days - more than double analysts’ most optimistic projections.

(During the period Vodafone UK reported two quarters, including local stats. Vodafone lost 24,000 customers in one, and gained 9000 in the next. Telecom gained 60,000 mobile users in its most recent quarter as a rising tide - or at least more people using multiple sims - lifted all boats.)

A deal brokered by the outgoing government, that sees 2degrees actually pay less than it admits on MTR that it lets on it in its droptheratemate.co.nz campaign, has helped fuel growth (read more at nbr.co.nz/secretdeal).

“They’ve had the most successful launch of any telco entering a fully-subscribed market anywhere in the world even with current MTR rates,” said a manager at 2degrees rival, who did not want to go on record.

“Now they’re also offering on-net pricing after slagging us off for it.”

Now, with a healthy army of customers, 2degrees has overcome its on-net pricing qualms.

The newcomers' very success attracting customers, and its conversion to the merits of on-net pricing, likely make it less likely that Communications Minister Steven Joyce will lean in the newcomer’s favour when he makes his decision whether to regulate mobile termination rates shortly (the Commerce Commission has recommended, in a split decision, that he accept voluntary cuts offered by Telecom and Vodafone which, crucially, involve MTR being wiped altogether for txt).

But, equally, the newcomer is looking less and less like it needs a ministerial leg-up.