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2degrees offers what it calls an unlimited mobile data plan. Unlimited in this context doesn’t mean no limits. The plan has restrictions.

Unlimited mobile data only applies to a single device. That usually means a phone. Users can’t tether their laptops or tablets to the device. Nor can they use their device as a Wi-Fi hotspot or use machine-to-machine communications.

Customers on the 2degrees network are told the plans are subject to a fair use policy. There isn’t a formal definition of fair use. It is best to read it as “don’t push your luck”.

In other words the plan may be generous, but it isn’t unlimited in the sense most English-speakers understand. 2degrees plan is $129. For that money you also get unlimited calls and texts1.

spark-vodafone-unlimited-mobile-data-plansSpark, Skinny Freedom plan

Spark is more precise about the terms and conditions of its Freedom plans. You still can’t tether, hotspot or handle machine-to-machine communications. There are unlimited calls.

Customers can use 22GB of data at normal speeds in any given month. After that they can carry on downloading, but everything happens at a slower pace. Skinny has the same conditions. Spark’s plan is $130. At Skinny you pay $120.

Spark’s marketing material doesn’t say how much slower. That’s not surprising. Mobile data speeds vary. It’s possible the official slower speed for enthusiastic downloaders is no worse than they’d see on a bad day.

2degrees Data Clock

There’s another data point: 2degrees’ Data Clock. A day of all-you-can-eat data costs $6. The conditions are similar, no hot-spots, tethering or machine-to-machine and fair use applies.

Let’s assume that customers who go over on the Spark and Skinny plans don’t go a long way over the 22GB point where slower speeds kick in. There will be customers on the plan who use less .

Likewise, we’ll assume that 2degrees’ fair use cut-off point is at more or less the same level, say, 30GB. That’s a gigabyte a day. Let’s also assume this is what Data Clock customers can buy.

Restrictions and limits

The restrictions tell you what you already know: mobile bandwidth is limited. The carriers have calibrated what they think they can get away with before the networks start to creak.

That’s why you can’t tether. It explains why you can’t, yet, choose a mobile data plan as a realistic alternative to fibre, copper or fixed wireless broadband.

It is why Spark’s marketing points out the Freedom plan includes 1GB a day of data on the company’s Wi-Fi hotspot network.

It’s also why both Spark and 2degrees say their plans are only a trial at this stage. And don’t overlook the point that Spark’s offer is only to certain customers. It’s not open to all comers.

Neither carrier wants to flood their networks. Nor do they want loud public whingeing from customers getting a lousy experience.

Cellular bandwidth

And that’s the danger. At least for now. There’s only so much cellular bandwidth and users share it. If lots of users hop on at the same time, the network is congested.

Spark has more suitable 4G spectrum than 2degrees. It arguably has more useful 4G spectrum than Vodafone, although that kind of debate can get technical fast. Let’s not go there right now.

The extra spectrum gives Spark more room to move on mobile data plans than its rivals. If the current wave of restricted, yet otherwise generous cellular data plans turns out to be a popular contested market, Spark will do best. That’s both in terms of revenue and network performance.

More bandwidth, bigger data plans coming soon

Cellular equipment makers promise 5G mobile will pump up the market by at least an order of magnitude. That means faster downloads, more users online at the same time, greater data throughput and less latency.

One day. Remember 5G mobile is still at least four years away in New Zealand.

Before then, we’ll see 4.5G. Spark already has 4.5G towers in Christchurch and Silverdale. The company says the towers can deliver faster speeds and offer more bandwidth for users to share.

There’s a catch here, to make the most of these towers users need devices tuned to 4.5G. So far there aren’t any on sale here.

There are two problems with plans to squeeze more data through the airwaves. First, you need more spectrum. Spark and Vodafone already have plenty. 2degrees not so much. But even more is needed in the right spectrum bands to deliver 5G’s promised benefits.

Challenges

At the same time, carriers need to build more towers to get the promised 5G performance. In busy areas they will need to build a lot more towers. Some of the extra 5G performance is down to dense, small cells as well as more spectrum.

That’s a technical challenge. In some areas it is a political one. Communities are torn between wanting connectivity and not wanting to be overshadowed by too many antennae. Most of all, it is a financial challenge.

The earlier investment in 4G technology is only now paying off. Sure, the economics are sound, but telcos pour hundreds of millions into wireless networks. Telecommunications companies have to recover that money.

On a positive telecommunications equipment tends to get cheaper in relative terms over time.

At the same time some installed 4G hardware is upgradable. Even so, the cost of putting in enough 5G cellular capacity so that everyone who wants can have unlimited mobile data with tethering, hotspots and the rest will be high. It runs to billions2. That means the cost of using it is unlikely to drop.

The cost of unlimited mobile data

2degrees entered the unlimited mobile data game with a carefully calibrated price. If the charge was much lower than $130 it would be in danger of cannibalising its existing high-end plans.

If the price was much higher it would be open to undercutting from rivals.

There’s still a healthy margin in $130. What’s more, it does something 2degrees has struggled with through its history: raise the average revenue per user.

It’s unlikely any carriers will go much below this level with all-you-can eat data plans. Skinny’s $120 plan could be the anchor price. If carriers want to compete they can add value. They could, say, offer 10GB a month of tethering on top of today’s package.

Unrestricted

Somewhere in the management spreadsheets at 2degrees, Spark and Vodafone is a calculation of a price for a full unrestricted unlimited mobile data plan. Whatever the number, it will be higher than $130.

No doubt there are people who would be happy to pay more, say, $200 for such a plan so long as the performance was acceptable. And there’s the problem. Today’s cellular data is fast, affordable or reliable, but not all three at once.


  1. Does anyone still care about how many texts come with a mobile plan? We seem to adapted to the idea they are, in effect, unlimited and part of the mobile deal. ↩︎
  2. Mobile carriers can cut costs if they opt for an open access model with shared towers. They may not all volunteer for such an approach, but it could happen. ↩︎

The 2degrees data clock means the mobile company 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.

2degrees mobile

2degrees 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.


  1. 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. ↩︎

Mobile phone handset

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?


  1. 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. ↩︎

Vodafone NZ RBI2 bidCrown Fibre Holdings’ Rural Broadband Initiative and Mobile Black Spot request for proposal closed on Monday.  That’s RBI2 to the rest of us.

At stake is $150 million of money funded by the Telecommunications Development Levy. Of that, $100 million is to finance high-speed broadband. It needs to reach to the last 15 percent of the nation not covered by UltraFast Broadband. The $50 million is to improve cellular coverage in areas not yet served.

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.

For another take on the rural broadband extension bids listen to InternetNZ deputy CEO Andrew Cushen talk to Kathryn Ryan on RNZ Nine-to-Noon.

Bill Bennett is editing The Download magazine for Chorus and has previously worked for Spark NZ.


  1. 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”. ↩︎

2degrees mobile

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.

2degrees conditions

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.