A telecommunications lobby group says 2degrees' low price entry into the mobile phone market shows New Zealanders have been overcharged.
2degrees will join Telecom and Vodafone in the mobile phone market from tomorrow, and today announced it would charge 44c per call and 9c per text, with no contract commitment
needed.
The company's price comparison table shows Telecom and Vodafone offer 89c per minute for calls and 20c per text.
2degrees is also offering the same rates for calls and texts to 21 other countries.
There will also be rewards for top-ups, such as free texts to any mobiles and a 22c per minute charge between 2degrees mobiles, available for 30 days from the top-up.
Phone users will be able to take their numbers with them and use any other phone which takes a sim card.
Telecommunications Users Association (Tuanz) chief executive Ernie Newman said he was delighted at 2degrees' offer.
"I always knew they were going to come in based on price, but their prices are very low. They've cut the price much more than I'd anticipated," Newman told NZPA.
"That is proof that New Zealanders have been paying far too much from the established duopoly."
Newman was sure Telecom and Vodafone would react and cut prices in response.
"That's what happens in the market place, but I think people will be entitled to take a slightly jaundiced view of that and say `if you can bring them down by that much, why have we been paying so much for the last 15 years?"'
Newman said New Zealand had been waiting for a third operator for a very long time and he was sure it could succeed.
"All the economic evidence is that when you've got a duopoly you don't get real price competition.
"We've seen here illustrated very graphically the extent to which it is possible for these prices to come down which the others have been resisting for all these years."
Newman said it was wise for 2degrees to tackle the prepay market first.
"I think the segment that they've gone for is a very big segment and it's the one that's probably the most price sensitive. I think they've made a good step by going into that," he said.
"They clearly have a commitment to go to postpay and the business market and data markets over a period of time."
2degrees chief sales and marketing officer Larry Moore said there was plenty of room for profit, despite saying its rates were much cheaper than Telecom and Vodafone.
"I don't think we should compare ourselves necessarily to the rates in the market. We should be looking at international rates," he told NZPA.
"There's been excessive profit taking in this market by the two incumbents. Basically we've come out with simple, clear pricing, basically good value for money."
Moore said 2degrees had tackled the prepay market first but there would be rollouts of other parts of the market in future.
"We believe that basically the part of the market that hasn't been given value is the prepay end of the market," he said.
"But you'll see us move very quickly into other parts of the market, again with the same level of disruption and compelling market that we've brought to prepay."
The 2degrees launch in Auckland also previewed several advertisements featuring New Zealand comedian Rhys Darby, who played Murray in the Flight of the Conchords television series.
2degrees customers can top up from more than 6300 locations, pick up sim cards from 2500 locations and get a top-up, sim and handset from 340 stores.
Handsets can be bought for prices from $79 to $649.
The network begins operation tomorrow. 2degrees says it covers "97 per cent of places that kiwis live, work and play".
Telecom spokeswoman Rebecca Earl said the headline rates from 2degrees were lower but its bundle offers were better, especially with text, which could be between 1.2c and 4c per text.
"We're confident with what we've launched with XT will prove popular but we welcome the competition."
Vodafone had yet to return calls from NZPA.
- NZPA
See more information the 2degrees website here
