Telecom mobile network opened to competitors

Matt Crockett says Telecom must win back market share. Photo / Brett Phibbs

Telecom is opening up its mobile network to competitors in a fightback for market share.

The company, which yesterday signed up phone company Digital Island to run mobile services off its network, has not ruled out further deals.

The wholesale deal - a mobile virtual network operator or MVNO in industry parlance - allows Digital Island to offer mobile services using Telecom's network to its mainly small business customers.

Telecom Wholesale head Matt Crockett said the big imperative for Telecom was, at the network level, to win back market share it had lost over the past few years.

Telecom currently hold 41 per cent of the mobile market, a share that has been gradually eroded by Vodafone.

In June, Telecom will launch a new mobile network using GSM technology - similar to that used by Vodafone - phasing out the existing network over five years.

The wholesale deals on offer from Telecom are for access to its current network, upgrading to the new network in two years.

CallPlus chief executive Martin Wylie is one of those carefully considering a deal to join Telecom's mobile network.

He said there were opportunities for CallPlus if Telecom made the pricing competitive enough to appeal to a customer interested in text and phone calling only.

"If we need to, we will go down that road with a view to migrating it on to a better technology later," said Wylie.

"We've struggled to get the right deal historically with Vodafone which is why we're the ones that hung out and never signed a deal."

Wylie expects to have an offer in the marketplace by mid-year.

Telecommunications analyst Rosalie Nelson of IDC said the main benefits of being an MVNO over a reseller were having more control over price and branding of a mobile offer.

"The international experience with MVNOs has been very, very patchy at best because it isn't necessarily a low-cost exercise and you want to look at how you can differentiate."

Nelson said the more successful MVNOs had focused on niche markets.

"What is quite interesting about Digital Island is they are not trying to play as a mass-market player. They have their niche, they have their customer base."

Crockett said partners such as Digital Island allowed the company to target markets where Vodafone had been successful, for example the Auckland small business market.

Vodafone is a step ahead of Telecom, having signed wholesale agreements in 2007 with Orcon, Compass Communications and M2.

Orcon's Scott Bartlett said it was still working with Vodafone to sort out mobile service it could take to market.

He said Orcon would not be happy to simply resell Vodafone's offer.

Compass was also due to begin offering mobile services to its mainly small business and residential customers next month, said chief executive Karim Hussona.

Hussona said Vodafone had recently made the deal more attractive by offering it raw unbundled minutes, allowing it to build its own calling plans rather than being compelled to have a similar offering to Vodafone.

TelstraClear currently resells Telecom's mobile services via a deal with its Gen-i arm after a falling-out with former provider Vodafone two years ago.