Mike Reynolds, CEO of 2degrees, says the biggest battle his company faces is being the third mobile phone network, breaking into a market with 100 per cent penetration by competitors. Despite this, he says there is still tremendous room for growth.
Speaking at the 10th Annual Telecommunications and ICT Summit, Reynolds says New Zealand presents a “unique” challenge. 2degrees will launch in August, making it the third mobile provider after Vodafone and Telecom.
“Every customer we get has to come from the other group,” he says. An extra challenge, he says, is to show potential customers it is able to give good value.
The New Zealand mobile market, he says, is not a “typical duopoly”. It is a ‘winner take all’ concept where the market is taken segment by segment, city by city. For instance, he cites the results of a recent survey showing that Vodafone dominates Auckland and Telecom dominates Dunedin. "I have never seen anything like it," says Reynolds who was with Starhub telco in Singapore prior to moving to New Zealand.
He says the mobile termination rates are unfair, unsustainable and anti-competitive and they have to be brought down to the true cost. The high mobile termination rate is resulting in, among other issues, high retail prices and low usage.
Regulation, he says, must be in line with international best practices without further delay. “It is easy to fix, but the incumbents will fight hard. It’s their job,” he says.
Another speaker at the conference, Russell Stanners, Vodafone New Zealand chief executive, says a key challenge for mobile providers is that customer needs are evolving in a changing world.
The work-life balance concept is rapidly fading away into “work-life rhythm”, he says. “Work, life, home is everywhere,” he says, and this means they need mobility and quick access to content wherever they are.
This is changing the way the industry and the business will deal with customers, he says. At the same time, the customers are demanding innovation, simplicity and value.
The recession means everyone is tightening their belt. He confesses that he does not like the huge Lotto jackpots, as with the upcoming Big Wednesday draw.
The vast majority of our customers don’t top up their prepaid by $20 when this happens, he says, as prepaid phone is very much a discretionary spend.