2degrees' 3G access set for next year

2degrees CEO Eric Hertz. Photo / Brett Phibbs

Users of high-end mobile phones will need to wait until next year before 2degrees unveils its 3G service in competition with Vodafone and Telecom.

According to its website, "it won't be long" until the switch is flicked on its 3G HSPA+ network capable of offering similar speeds to those experienced by broadband users in urban areas - around 4 megabits per second.

Chief executive Eric Hertz said while the network was 3G capable, the service won't be on offer until the first half of next year. "As we turn it on and optimise it, that takes some time to make sure the quality is good," said Hertz.

Speaking to the Business Herald after the network launch this month, Brad Horwitz, chief executive of controlling shareholder Trilogy International, said a sequence of events, from the settlement of the spectrum payment through to marketing, needs to occur before the 3G service will be launched.

"There will be a very strategic and sequenced roll-out of additional services," said Horwitz.

What Horwitz did promise was a "value-driven" approach would pervade all of the service offerings - from voice and texting, through to data.

2degrees runs a 2G network - offering data speeds up to 60 kilobits per second as well as voice and text - on 900 megahertz spectrum.

Data costs 50c per megabit - fairly steep pricing when considered alongside deals available from Telecom and Vodafone - with no data cards available for laptops.

The 900 megahertz spectrum was sold to 2degrees - then known as NZ Communications - in 2007 as part of a spectrum renewal agreement between the Government and network operators Vodafone and Telecom aimed at getting a third player into the market.

Vodafone and Telecom agreed to on-sell a chunk of spectrum to the new entrant in exchange for the early renewal of existing spectrum rights.

2degrees, through its long-time shareholder Hautaki Trust, also has access to the third generation (3G) spectrum.

The spectrum was set aside for Hautaki, representing pan-Maori interests, to purchase at a discounted price when it was auctioned by the Government in 2000.

In addition, Hautaki received $5 million of start-up funding.

Hautaki has yet to take possession of the spectrum - there are no "use it or lose it" provisions in the agreement - but can settle any time with a down payment of around $3.5 million followed by three annual instalments of approximately $3.5 million.

In practice, the settlement payments will be made by 2degrees after a post-auction deal saw Hautaki exchange access to the spectrum for an equity stake in the mobile start-up.