Mobile carrier 2degrees now sells data in time blocks as well as by the gigabyte. Data Clock is an app for pre-pay customers to manage time-based data purchases.
Data Clock allows prepay customers to buy five minutes of data for 50 cents. Ten minutes cost 60 cents. An hour is $1.50. Customers can buy 12 hours for $4 and 24 hours for $61.
These prices are not set in stone. 2degrees is using a form of dynamic pricing. This means data can cost less when demand is low — say, during the wee small hours. On the flip side it means data can cost more during busy periods, that’s most likely the evening peak.
Data Clock restrictions
Data Clock does not allow tethering or a phone used as a Wi-Fi hotspot. 2degrees says it is for personal use only.
As with the recent 2degrees unlimited data plan, there is an excessive use clause, so it may not be a fill-your-boots option for users wanting a lot of data.
2degrees says selling time blocks makes sense for customers who don’t know how much data it takes to do things online like read mail, browse the web or watch video.
While that may be true, data has been around long enough for most people to grasp the general idea. If anything time blocks can make life more complicated, especially for people who have always-on apps using a trickle of background data.
At times you’ll want this
It is a great offer for people who may need to use a lot of extra data over a short period. Say when you’re working away from base. Most plans are for people who use the same amount of data each month. If your use is lumpy, this fills the gaps.
One negative aspect of time pricing is that it can reward a carrier for running an inefficient network. It takes longer to download files at slow network speeds. It can mean 2degrees earns more for slow downloads than for quick ones.
Despite potential flaws, hats off to 2degrees for innovating. The company seems determined to ramp up competition, especially for low-end customers.
It’s also away to improve the amount of revenue per user it earns, which is lower than Spark or Vodafone. This is 2degrees’ second move on the mobile data market in a week.
Which means, in theory, a customer could buy unlimited monthly data for around $180 give-or-take the dynamic pricing. This compares with the $129 unlimited plan that includes unmetered voice calls and text but doesn’t allow tethering or running a hot-spot. The $4 for 12 hours option might be the best choice for someone wanting to get the maximum data during work hours. ↩︎
It took Spark two days to respond to 2degrees’ all-you-can-eat mobile plan. That’s agile for a large company. There was a time when it would take months to get a counter offer like Freedom Mobile out the door.
From Easter Spark and Skinny customers can buy plans with unlimited voice and texting as well as uncapped data. Spark’s Freedom Mobile plan costs $130 a month. The Skinny Direct Freedom Mobile is $120.1
As with 2degrees, Spark only allows a single phone to use the data. Users are told they can’t tether or operate a Wi-Fi hotspot. And like 2degrees, Spark says the plan is offered on a test basis and only to a limited number of customers.
Questions and answers
Spark Home Mobile and Business CEO Jason Paris says; “We’ve seen 2degrees’ new ‘unlimited’ plan – and while we like the intent, we believe it leaves customers with as many questions as answers.”
The big question for most users considering a plan is what does 2degrees mean when it says there is a fair use limit.
Spark attempts to answer this for its customers by bringing back traffic shaping, also known as throttling. That is, it delivers the first 22GB of data in a month as normal. Once a customer goes over that amount, the download speed drops.
This used to be a common practice with broadband accounts. It provides users with enough incentive to self-monitor their use, without imposing horrific consequences should they over-indulge.
The Freedom Mobile New Zealand model
Paris says he thinks this is the right model for New Zealand.
Well, up to a point. Unlimited mobile data plans are common overseas. They often have restrictions. The restrictions in New Zealand are tougher than elsewhere. In other markets carriers allow customers more. In the US 10GB of tethering is normal.
It makes sense to impose some limits on an ‘unlimited’ plan. Wireless bandwidth is a finite resource. If carriers allow unrestricted use, wireless networks would quickly become congested and performance would drop.
There are still questions. Most of all, how far will Spark go with the throttling? Will download speeds drop to half their normal level or right back to a crawl?
The other question is where is Vodafone in this game?
The $10 price gap between the two brands’ plans is interesting. In effect Spark users get Spotify, Lightbox and a daily 1GB of Wi-Fi hotspot downloads for $10. This tells you the real premium Spark puts on those services. ↩︎
The process is confidential. So far four bidders have gone public revealing some aspects of their plans. There could be others.
Chorus: extend and improve existing land-based networks
Chorus aims to extend the reach of its fixed-line network beyond urban New Zealand. The company says it is willing to work with others. It did that when it joined Vodafone to build the original Rural Broadband Initiative.
Extending can mean new fibre and maximising the use of existing fibre in rural areas. It can also mean upgrading copper.
Chorus says it wants to improve fixed-line network performance in rural areas. This could mean upgrading copper to VDSL. Newer copper technologies are also possible.
It says its fixed-line networks are not prone to congestion at busy times. They don’t need to use data caps to manage demand. That’s a dig at fixed wireless broadband on cellular network.
Central to the Chorus proposal is its networks will be open access. Any retail service provider can use them.
Choose wireless say Vodafone, Spark and 2degrees
Vodafone, Spark and 2degrees have combined to offer a cellular-based approach. Their proposal includes up to 520 new cell sites.
They say the extra towers will extend the reach of today’s cellular coverage by 25 percent. Not only will the three companies share rural towers, they will also share antennae and spectrum.
That’s a huge step for Vodafone and Spark but it makes economic sense. It will reduce capital expenditure, stretching the money further. And it will keep running costs down.
Updated: While the companies’ press didn’t say the RBI2 towers will be open access, Spark says they will be. This echoes the approach in the first stage of the RBI where Vodafone built towers, but other carriers can use them.
Wispa makes case for small, local service providers
Wispa, a coalition of small rural wireless ISPs aims to win up to $2 million from the fund for each of its 30 members. Spokesman Chris O’Connell says Wispa member already serve 40,000 customers. They deploy wireless broadband in areas bigger companies often consider uneconomic.
In some cases Wispa members work with the big telcos reselling their services.
Wispa members are experts at rural broadband. They know the terrain and they are close to their customers. Most know how to deliver great broadband on the smell of an oily rag. Many will be able to deliver CFH the greatest bang for the buck. On the downside, it can be harder managing 30 small players than cutting a deal with the big operators.
Alongside Wispa, Aird Towers aims to build what it describes as “operator agnostic” towers. In other words an open access alternative to the carriers. The Aird plan would allow the main mobile carriers and small wireless ISPs to share access.
Mix and match
The mobile carriers’ joint bid looks like an ideal way of fixing the mobile black spot problem. Otherwise, when it comes to delivering the best possible broadband to rural users at the least cost; it’s not a case of either or. All the proposals have some merit.
Tuanz CEO Craig Young says users would probably be best served by a combination of the bids. And that’s the most likely outcome.
Most bidders accept there is overlap and room for co-operation1. Vodafone CEO Russell Stanners told Stuff: “..it makes sense for the Government to spend all the $150 million it has earmarked for improving rural telecommunications on new cellphone towers. With none going on improvements to the fixed-line network.”
Even then there is a case for Chorus to provide fibre to the new cellular towers. There is also a case for any towers to be open access so that Wispa members can use the infrastructure.
After all, it seems wrong to deny rural users the benefit of full broadband competition.
RBI2 reaches the last 15 percent
When work finishes on the second stage of UFB, 85 percent of New Zealanders will have fibre access. The RBI2 plan is to boost broadband for the last 15 percent. In some ways they need it more than city folk. And the rural economy makes up the bulk of exports.
Fibre is the best way to connect to the internet. In an ideal world, everyone would get it.
It makes economic sense to connect the first 85 percent of the nation to fibre. Once you get beyond that segment of the population, connection costs rise fast. Each home in the next five percent costs, say, twice a much on average to connect as the bulk of homes. With the last 10 percent, the per house costs rise further.
So away from any low-hanging fruit, wireless is likely to be their best option. The most cost-effective way of getting broadband to the wop-wops is a mix of fibre and wireless.
Crown Fibre Holdings says it is now assessing the RBI2 proposals before moving to negotiations with shortlisted suppliers. It hopes to announce contracts by July.
Bill Bennett is editing The Download magazine for Chorus and has previously worked for Spark NZ.
Originally the story said the mobile carriers didn’t talk about co-operating. Spark clarifies this saying: “We haven’t said we won’t co-operate. All we’ve said is no more $ should be spent on copper”.↩︎
You can’t share it. You can’t tether. There are conditions. But you can download as much 2degrees mobile data as you need on your phone without worrying about the bill.
Mobile carrier 2degrees offers what it describes as New Zealand’s first unlimited mobile data plan.
For $129 a month customers get to fill their boots with unlimited calls, unlimited texts and as much data as they can shovel through their handsets.
For a limited time only
The deal is for a limited time. 2degrees says the offer is a trial. With refreshing honesty chief marketing officer Roy Ong says if it’s not economic for the company then it will stop offering the deal.
In truth, the way the offer is presented means it is unlikely to spin too far out of control. Phones can only absorb so much data in a month. And anyway there’s a fair use clause which means 2degrees can stop anyone abusing the offer.
If 2degrees allowed users to tether their phones to computers or set up mobile hotspots and share it with friends then the network might run into problems. Remember, 2degrees has less 4G spectrum than its rivals.
In some ways the $129 unlimited data plan seems unnecessary, almost redundant. For $80 a month 2degrees customers get unlimited calls and texts along with 10GB of data. What’s more, you can run a hotspot or tether. You’d have to work hard on a phone to get through that amount in normal use. That is unless your phone also happens to be your TV screen.
If anything, the $129 unlimited offer underlines the value of the $80 plan.
It’s not clear how 2degrees will police the conditions. Apparently there are ways users can cloak Wi-Fi hotspot or tethering activity. But the fair use clause should cover all that.
Unlimited mobile data plans have been late to arrive in New Zealand, there are a fact of life elsewhere in the world. US carriers offer unlimited data plans with prices starting from US$50. Some even allow limited hotspot and tethering.
Sooner or later unlimited mobile data plans will be as common in New Zealand as today’s unlimited broadband plans. And one day they won’t include restrictions.
In practice the real value of this kind of unlimited plan is that it means you never face making decision to, say, not use data because you may run out.
Telecom NZ’s market share was already falling before 2009. Then, the communications minister Steven Joyce announced plans for an ultrafast broadband network.
According to IDC Research, Telecom NZ, now Spark, held a 59.1 percent market share in the fourth quarter of 2007. By the same quarter in 2009 it was down to 54.3 percent.
Today, Spark is still the nation’s largest telco. Its market share is down to just 38 percent.
The two measures are not the same thing. Spark’s 38 percent share comes from the Commerce Commission draft liability allocation process. IDC measured total revenue market share.
Although the Commerce Commission used a different market share calculation, the result is so different to the earlier IDC estimate, that it’s clear there has been a major shift in market structure. Ultrafast broadband has changed the industry dynamic.
It’s not obvious this means greater competition. Between 2009 and 2016 Telecom NZ demerged its Chorus business unit. This is now a separate company.
According to the Commerce Commission figures, Chorus has a 22 percent market share. Add this to the Spark share and you are, in effect, back in 2007 only this time Telecom NZ is two separate companies.
There is no doubt Spark and Chorus compete. Spark’s recent fixed wireless launch was a competitive shot across Chorus’ bows.
Is telecommunications competitive?
But can we be confident the market is more competitive than before?
Vodafone was number two in 2007 and 2009. It is still number two today with almost the same market share.
It is as if TelstraClear’s entire New Zealand business evaporated.
2degrees didn’t exist in 2007 and was only weeks old by the fourth quarter of 2009. It has come from almost nowhere to take the number four market position. That’s a competitive win of sorts, but not much.
Nothing 2degrees does challenges or threatens the two larger players. It is about one quarter the size of Vodafone and less than 20 percent the size of Spark. More to the point, 2degrees has yet to make a profit.
Vocus is an interesting newcomer. According to the Commerce Commission calculation it only represents three percent of the market. That’s not much more than the 2.4 or 2.3 percent its parts CallPlus and Orcon accounted for in 2007 and 2009.
Not much change there either.
After Vocus the remaining players are tiny. Their market shares amount to little more than rounding errors.
After Telecom NZ split
The main change between 2007 and 2016 is that Telecom NZ is now two separate companies. Consolidation means there are two less major players elsewhere. The net effect is one less major telecommunications company.
Chorus is wholesale only. Which means customers have two less retail telecommunications companies to choose from. There is a long tail of small entreprenurial service providers who may or may not be thriving. Yet it us hard to argue the market is more competitive than it was a decade ago.
Another way to gauge competition is to look at how much money the main telcos make today compared with in 2007.
In 2007 and 2009 Telecom NZ had revenues of about NZ$5.6 billion in both years. Net earnings in 2007 were about $850 million and $400 million in 2009.
In 2015 Spark had revenues of around $3.5 billion and Chorus took about $1 billion. Together that’s $4.5 billion. The total is more than a billion less than Telecom NZ made when its was still a single business.
Spark’s 2015 net profit was $375 million while Chorus net earnings were $91 million. A total of $466 million. That’s a better collective performance than 2009, but well below the 2007 figure.
In 2009 Vodafone NZ reported revenues of $1.6 billion and $260 million profit. By 2015 total revenue, including TelstraClear, was $2 billion with a $120 million loss. In part Vodafone is still absorbing the TelstraClear business it acquired in 2012.
You could argue the billion dollars revenue Spark and Chorus did not make is money business and consumers might otherwise still be paying. If that’s the case, then the reforms have delivered a cost benefit to customers.
Otherwise, it’s not yet clear the market is more competitive than it was a decade ago.