Wellington, Manukau frustrate 2degrees

BY JENNY KEOWN & TOM PULLAR-STRECKER
Last updated 10:05 11/05/2009

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Third mobile start up NZ Communications says resource consent problems in Wellington and Manukau City have slowed down the build out of the 2 degrees network.

NZ Communications confirmed today that its mobile phone network will launch in August and its cellsites are expected to comprise a mix of second generation (2G) and third generation (3G) technology. Chief executive Mike Reynolds said its 2G cellsites could easily be upgraded to 3G at a later date with a "card swap".

Chief engineer Mike Goss, who has built networks around the world, says members of the public in Wellington and Manukau City are upset at some of the proposed NZ Communications land sites and are lobbying councillors for them not to be approved.

"This has slowed the process down considerably," says Goss.

Under resource consent laws the Government grants consent for public objects such as street-side poles to be used as cell sites, and local government grants consent on land leases for the sites.

Goss built 2,500 cell sites for mobile phone operator Orange in Britain in 18 months.

"It is taking much longer here," he said.

It's understood NZ Communications, formerly Econet Wireless, had aimed for a launch in October last year, but was delayed when the firm became bogged down in resource consent procedures.

Reynolds would not be drawn on pricing, speeds or data plans for the network. But he said it would provide "quality and value" which was not being offered by rivals Vodafone and Telecom. People would receive "great value at a fraction of the price most people pay today".

NZ Communications is gearing up to launch just as competition heats up between incumbents Telecom and Vodafone. Telecom will launch its new $574 million XT network on May 29 after a delay caused by last week's court battle with Vodafone. And Vodafone is expanding its 3G network to cover 97 percent of the population, up from 70 percent. This expansion is due to be completed on May 31.

Between them, Vodafone and Telecom can claim about 4.6 million customers, more than the entire New Zealand population.

The Commerce Commission is investigating the possibility of regulating mobile termination rates - the fee mobile operators charge rivals to end calls on their network. It has been speculated that NZ Communications would need this price to come down in order for it to launch.

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But Reynolds said he was not relying on any more regulation in order to launch and would "focus on the rules of the game as they exist today."

NZ Communications had spent more than $200 million to date, said Reynolds, and the network would launch in 2,000 outlets around the country. It's rumoured these outlets will be supermarkets and petrol stations.

Consumers can take their current number over to NZ Communications or choose from the company's ten million 022 numbers.

The company will sell sim cards that can be put into people's existing mobiles. It will also sell a range of phones, priced from $79, from brands including Nokia and Samsung.

Marketing manager Larrie Moore says the company will offer clear value, and consumer control of products with no surprises.

"Two out of three people have told us that they are sick of being locked in on contracts."

Moore dismissed speculation that the company would target only budget customers. "That's how Vodafone and Telecom have liked to paint us, [but] we'll go after a broader segment," he said.

The enigmatic Tex Edwards, who headed the company from its beginnings as Econet in 2000 before handing over the reins when private equity firms Trilogy Partners and GEMS invested in 2006, said it had been a "marathon effort" to remove regulatory barriers.

Separately Edwards said he was looking at breaking up another monopoly in another sector - but declined to give more details.

2degrees is a play on the "six degrees" of separation that are said to separate people on Earth, reflecting the closeness of the New Zealand community.

- BusinessDay

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