More choice for mobile phone users as telco links to Vodafone

Vodafone's Russell Stanners (left), signed a wholesale deal with Compass' Karim Hussona in 2006. Photo / Kenny Rodger

Consumers have another choice for mobile calling with the launch of a service from Compass Communications.

Piggy-backing on Vodafone's network, the locally-owned telco is luring residential and small business consumers with cut-price deals.

Originally signing a deal with Vodafone in 2006, Compass chief executive Karim Hussona said the delay in launching was down to a mix of technical factors, such as number portability, opening up a unique number range, and renegotiating the deal with Vodafone.

He said the original agreement - a retail minus deal which calculates the wholesale price based on the retail price minus a wholesale discount - became difficult to manage.

"Every time their retail division introduced something there'd have to be a re-arrangement of our plans," said Hussona.

"It also wasn't that attractive because it was very difficult for us to differentiate. We looked very similar to Vodafone's retail plans." Compass will be one of five mobile virtual network operators (MVNOs) signed to Vodafone's network.

Two companies are signed to Telecom's CDMA network. Telecom will begin offering wholesale access to its new WCDMA-based XT Network in 2011.

While the wholesale deals are new to the New Zealand market industry analyst Nathan Burley of Ovum said Australia had seen MVNO operators come and go since 2000.

"In Australia less than 4 per cent of connections are MVNOs," said Burley.

"Despite the huge potential and huge number that have attempted to grow in this market, a lot of them have struggled."

Burley said those that had been successful had either kept costs low - often with a "lean" internet-based distribution model - or had been in countries where the wholesale market is extremely competitive.

Many of the more successful MVNOs were bought by the carriers, said Burley.

The Compass offer is sim card only, meaning the company would not be offering any handsets.

"We just felt that was going to add a lot to our costs to be honest because handsets are a bit of a fashion item, they come and go," said Hussona.

Customers on Telecom's CDMA network will be offered a gift voucher to purchase a handset and Vodafone customers can switch sim cards in their existing handset.

There will be no prepaid service - despite Compass running the prepaid top-up terminals in service stations and supermarkets through its Ezipay business - but customers can take a "no contract" account option.

Customers signing up to a contract received a loyalty discount on calling costs.

Under the deal, residential customers pay a $15-per-month access charge - akin to a line rental - and a flat-rate 25c per minute for calls to a New Zealand landline or mobile.

Hussona said the company would market the mobile service to its 40,000 fixed-line business and residential customers.

Customers can take their existing mobile number or use the 028 number range assigned to Compass.

PIGGY BACKING

Telcos and their mobile virtual network operators (MVNOs):

TELECOM
* Digital Island
* TelstraClear

VODAFONEM2
* Black&White
* Compass Communications
* CallPlus
* Orcon

2DEGREES
* No MVNOs, but open to deals