For a cool €1000 plus VAT European telcos, regulators and policy makers can learn from New Zealand’s experience structurally separating the network company Chorus from Telecom NZ. Continue reading
Telecom NZ is taking a risk rebranding as Spark. Continue reading
Mobile carrier 2degrees officially switched on its Auckland 4G network today. The company says the service is live on 72 cell sites in the central area of the city.
The North Shore, Waitakere area and some Eastern suburbs will have to wait until ‘later in the year’ when 2degrees says it will triple coverage in the region.
2degrees is relatively late to the 4G party.
Vodafone launched its service early last year and says its faster mobile data network now covers about half of the New Zealand population. The carrier has sites in 38 locations.
Telecom NZ also went live last year and has sites covering much of Auckland, Wellington and Christchurch.
However, the established network coverage is patchy. Neither Telecom NZ nor the Vodafone 4G service reaches my North Shore home.
Where it works, the 2degrees network is spectacularly fast as the NBR’s Chris Keall found:
Juha Saarinen reports Vocus in talks to buy NZ backbone provider FX Networks. He writes:
Stock exchange-listed telco and internet provider Vocus is said to be eyeing up New Zealand national backbone operator FX Networks, in a deal worth over NZ$100 million (A$94 million), according to sources close to the discussions.
Other local sources close to the discussions confirm something is going on between the two firms.
Meanwhile the NBR’s Chris Keall provides more evidence:
Telecommunications consultant Jon Brewer tweets:
Vocus + FX could mean a single market for Internet bandwidth across Australia and New Zealand. That's pretty exciting.—
Jonathan Brewer (@kiwibrew) June 30, 2014
He is right about the deal being exciting. What we are seeing is a new twist to the consolidation that’s been reshaping New Zealand’s telecommunications sector since Telecom NZ first announced it would demerge its Chorus division to win government fibre contracts.
In fact there are two twists. First, we’re seeing consolidation at the transit level. FX and Vocus run the long haul networks connecting cell towers, local fibre networks and exchanges to hubs. This will see economies of scale and greater buying power at this level.
The second twist is the regional nature of the deal. This comes not long after Telecom NZ finally pulled the plug on its Australian operations and following Telstra’s withdrawal from New Zealand. Potentially the Vocus FX Networks tie up will create a single market across Australia and New Zealand — with all that implies. It will also create a new large-scale player in New Zealand.
This morning’s Comms Day has an interview with Nokia ANZ head Stephen McFeeley. He talks of opportunities, which in the case of New Zealand says Vodafone is trialling small cell controllers and Voice over LTE:
A key client for some of Nokia’s small-cell clout – as well as for more work preparing for the release of 700MHz spectrum – is Vodafone New Zealand. “With Vodafone New Zealand, we’re running a whole range of technology trials; Vodafone NZ has our Flexi Lite which is a small cell [base station] and our Flex- iZone technology which is a fairly leading-edge small cell controller,” said McFeeley. “We’ve got VoLTE trials [there] as well, which of course is on the back of HD Voice, which we’ve already launched in New Zealand. With the New Zealand relationship, we’re pushing that very heavily to be very focused on new technology.”
While CallPlus isn’t saying how much it paid to buy Orcon. Assuming CallPlus paid the right price — which is a safe bet — the deal makes far more sense than any alternative mentioned in recent weeks.
Selling internet services in New Zealand is brutal. Margins are wafer thin. Competition is tough. And the cost of customer acquisition is high.
The path to profit is to build scale so that unavoidable, fixed costs spread over the widest number of accounts. Then find ways of adding value.
It’s about to become more brutal.
In the copper era ISPs had the option to differentiate by putting their own kit in exchanges. With fibre, they have to buy from the same menu of services from Chorus and the local fibre companies, all at the same price within any region. That leaves ISPs little room to play with.
So scale is essential. Orcon was never going to get there from here. CallPlus had a shout of building the necessary scale, but it would have been slow, possibly too slow. Picking up a competitor short circuits that. It makes sense.
CallPlus’ press release says the company has a 15 percent market share. I suspect there could be more consolidation to come.