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Tutela’s Consistent Quality percentages

Tutela says Vodafone has New Zealand’s fastest mobile data. It wins with downloads and uploads. The mobile industry research company says 2degrees has the highest consistent quality and the best latency.

When it comes to raw mobile speed Vodafone is well in front of Spark and 2degrees. Its median download speed is 23.9 Mbps. Uploads come in at 9.2 Mbps.

Spark trails with a median download speed of 20 Mbps. That’s not far behind Vodafone, yet it has the slowest upload speed at 7.7 Mbps.

Tutela speed test results June 2020

While 2degrees has the slowest median download speed at 19.5 Mbps, that is only 4.4 Mbps behind the leader. The company is second when it comes to upload speeds with a median of 8.1 Mbps.

Consistent quality

According to Tutela the 2degrees network is good enough for applications like high definition video calls, streaming video and mobile gaming for 85.6 percent of the time.

Tutela calls this measure ‌Excellent Consistent Quality. The mobile carriers are only compared in places where they all have coverage.

Spark follows a fraction behind meeting the standard for 84.9 percent of the time.

Vodafone brings up the rear on that measure, reaching the required level 81.9 percent of the time.

The numbers are so close that it might help to think of the scores as a draw with Vodafone a tick behind.

2degrees wins on latency

2degrees had the best one-way latency result at 24.5 ms. It was followed by Vodafone at 25.9 ms. Spark in third for a median one-way latency of 29.4 ms.

Looking at these numbers it seems there is not much in it. Although Vodafone and 2degrees do better than Spark in almost every measurement, no single carrier is a long way ahead or behind the pack.

The report also shows that if Vodafone’s December 5G launch has made any impact, it is mainly at the margins.

To get these results Tutela took 3.89 billion network quality measurements including 1.36 million speed tests.

Tutela carried out its tests between March and May of this year. As New Zealand was in lockdown for much of this time the numbers may not reflect everyday mobile performance.

An infrastructure sharing agreement with Vodafone means 2degrees can expand its network reach by around 200 towers.

Most of the towers are in less densely populated areas. These are places where, until now, customers would need to roam on the Vodafone network.

The agreement between the two telcos echoes the network sharing work being done by the Rural Connectivity Group. Vodafone and 2degrees, along with Spark, are partners in the RCG.

Vodafone has installed Multi Operator Radio Access Network (MoRAN) hardware on the towers. They allow 2degrees to use its own spectrum.

Performance gains

2degrees says customers will notice improved download speeds, as well as better video calling and streaming.

Adding these towers means the carrier can fill in the remaining gaps in the company’s coverage which. Before the agreement the network reached about 98.5 percent of the population. Yet it covered considerably less geographic area than Vodafone or Spark.

The carrier says the move will see an end to national roaming and all customers will “receive the full 2degrees experience”.

Martin Sharrock, 2degrees’ chief technology officer, says; “Using our spectrum in these areas for the first time is like adding a new motorway for our customers to use, they move from sharing our partners’ network to a network dedicated just for 2degrees. This is possible without building new cell towers.”

2degrees smart move

It’s a smart move by both companies. Vodafone gets to earn a handy extra revenue stream without undermining its competitive position. Although carriers don’t look at the revenue generated per tower, that extra income means the 200 or so more remote sites will do a better job of earning their keep.

Meanwhile, 2degrees gets to extend its reach without the need for capital expenditure.

Capital is going to be tight. The company will need to build a 5G network. That’s expensive, but majority shareholder Trilogy International Partners is struggling.

In the past 2degrees has used vendor financing from Huawei, its network equipment partner, to expand its coverage. With Huawei locked out from building a 5G network in New Zealand that avenue is also closed.

Regulating termination rates introduced ten years ago kick-started mobile market competition in New Zealand. Now it’s time to review the rules. Don’t expect to see much change.

To no-one’s surprise the Commerce Commission’s draft review of mobile termination rates recommends they stay regulated.

A termination rate is the price one phone company charges another when a call from one network is made to a customer on another network. Mobile termination rates affect calls between the Spark, Vodafone and 2degrees networks.

Until a decade ago mobile termination rates were unregulated. Carriers could charge what they liked. And they did. New Zealand termination rates were high.

This stifled competition and meant mobile calls were expensive by international standards. That in turn meant people here didn’t use their phones as much as people overseas.

Calls between networks

Before regulation Telecom NZ, now Spark, and Vodafone, would charge customers less to call others on the same network than the cost of calling another network.

In the jargon of the time they offered have different prices for on-net and off-net calls.

Mobile termination rates mean customers on the least popular network end up, over time, paying more to use their phones.

This acted to stop people choosing 2degrees, in part because potential customers feared friends might call less often.

In 2010 the government stepped in. Termination rates have been regulated since then.

The move triggered a dramatic drop in call prices to the point where New Zealand moved from being an expensive place to use a mobile phone to a relatively cheap place.

Flat playing field

Most of all, the regulation flattened the playing field. This meant the third mobile network, 2degrees, could grow beyond being a niche player.

In turn this further boosted competition and paved the way for cheaper calls more innovative price deals.

Today we have a vibrant, competitive and innovative mobile market.

Mobile termination rate regulation almost didn’t happen. Ten years ago Telecom NZ and Vodafone negotiated a voluntary agreement with government to lower charges. The Commerce Commissioned agreed.

It was all set to go. Then Vodafone began selling the most aggressive on-net plan ever seen in New Zealand. The Commerce Commission reversed its earlier decision.

The case against mobile termination rates

Fast forward to today. The Commerce Commission now says there may be a case for dropping regulation of termination rates for SMS text messages. That’s because of the popularity of alternative over the top services like WhatsApp.

This external pressure has reduced txt prices to the point where many plans offer customers unlimited texting at no extra cost. High charges are unlikely to return.

The Commerce Commission says voice call termination rates should remain regulated because there are few competitive alternatives.

That’s true on one level, but it’s not straightforward because today’s mobile battleground is all about data. With lots of data, customers can make voice calls using free or cheap over the top services.

And anyway, voice calls are not as popular as they were ten years ago.

If, in a world without regulated mobile termination rates, a carrier attempted to charge higher voice call rates, the move to data calls would accelerate. The trend away from voice calls would speed up. So, it’s possible we no longer need to regulate.

On the other hand economist Donal Curtin thinks the regulation needs another look.

The Commerce Commission now wants feedback on its MTAS draft review findings.

Mark Aue 2degrees
2degrees CEO Mark Aue

Rob O’Neill at Reseller News writes 2degrees slashes costs, 120 jobs to go.

Telecommunications provider 2degrees is planning to cut its 1,200-strong workforce by 10 percent as it braces for the impact of the coronavirus pandemic.

2degrees also briefed its people today on a range of cost reductions to respond to the impact, advising that while agreed measures went a long way, more would be required through staffing changes.

The company is therefore proposing a 10 per cent reduction in the company’s workforce.

In addition the company plans to reduce capital spending and defer non-essential projects, reduce operating costs including a freeze on recruitment, renegotiate supplier rates and vendor costs and an accelerate cost saving initiatives from 2021. 

Aue said that although 2degrees’ people are its biggest asset, the “harsh reality” was that the company had to take decisive action, reducing staff numbers or the hours worked for some roles.

Covid-19 was always going to be awful for businesses. New Zealand, and for that matter the entire world, has never seen such a dramatic and fast slump in demand.

Yet telecommunications companies, especially those with their own mobile network ought to be doing well out of this. After all call volumes and demand for broadband services are at an all time high.

One problem is that thanks to the emergence of unlimited call and data plans there is no longer a direct correlation between demand and revenue. 2degrees can carry twice as many phone calls and deliver twice as much data without earning much more.

At the same time roaming revenue is close to zero. Roaming has become much cheaper in recent years, we no longer see headlines about people returning from overseas to face horrific telephone bills. Even so, roaming is still lucrative for mobile carriers. It costs them little and the margins are high relative to the rest of the business.

Telcos have been trapped in profitless growth for some time now. Margins are wafer thin. I recall Vodafone CEO Jason Paris telling me some time ago that the industry has competed away most of its profit.

Phone companies like 2degrees need to continue to invest in new technologies and add capacity to meet demand while revenue flatlines. Losing roaming may even see total revenue drop this years. It doesn’t help that 2degrees’ parent company is not healthy at the moment. Unlike Spark and Vodafone, 2degrees has yet to jump into the expensive business of a 5G network upgrade.

Horrible as it is to make people redundant, Aue is right to act early. Things can get worse. They probably will get worse. It’s possible we will see a wave of industry consolidation in the coming months. And it’s a near certainty that 2degrees is the major telco most likely to undergo some form of change as events shake down.

Telcowatch says Vodafone is New Zealand’s mobile market leader.

There’s not much in it. Vodafone is one percent ahead of Spark on 36 percent.

The two were neck and neck for most of last year.

While the lead is real, it’s not dramatic.

Nor is it the whole picture. The way Telcowatch measures the market means that Spark’s Skinny business is counted separately from its parent company.

Adding that back into Spark’s figure puts the company well ahead of Vodafone with a 41 percent market share.

Telcowatch monthly market share 2018 - 2019

However you crunch the numbers both Spark and Vodafone have a clear lead on 2degrees. The third mobile carrier’s market share is stable at 23 percent. That makes it a little over half the size of Vodafone and Spark.

That’s a respectable showing for the youngest mobile carrier which entered a market that was almost at saturation point. And there is no question 2degrees has reshaped the market.

It probably suits everyone concerned to count Skinny as a seperate business.

Yet Skinny is definitely a Spark brand.

When Skinny started it was more distinct from its parent than it now is.

Today Skinny’s product alignment can be seen as rounding out Spark’s offerings. It’s a no-frills version. In supermarket terms it is PaknSave to Spark’s New World.

The two share the same network infrastructure. Skinny employees may be loyal to the brand, but they are Spark employees. Spark’s management decides Skinny’s strategy.

Skinny remains the smallest of the four brands. In December its market share was 5.6 percent. It has been between roughly five and six percent for the last couple of years.

The most interesting aspect of the recent report from Telcowatch is not the interplay between Spark and Vodafone, but the way Skinny has been growing its market share at the expense of the parent company.

Over the last year Skinny is the best performer in terms of market share growth. It has grown gradually.

It’s not hard to understand why. Despite all the fuss about 5G, the mobile phone market is mature. There’s less differentiation between brands and less of a premium in Spark’s brand when compared to Skinny.

There is, however, a considerable price difference. Slowly, but surely, customers are waking up to this. You can buy what amounts to the same mobile experience for less money. The big surprise is that more people have yet to realise this.