XT Network lifting Telecom's image

Paul Reynolds

IT has been nearly a month since the launch of Telecom's XT network brought competition to the 3G mobile phone market.

Vodafone says it has been business as usual and that the heavily promoted new network is not denting its customer base.

Vodafone is estimated to have 53 per cent of customers and - with three years operating as effectively the only 3G network - has around 60 per cent of mobile revenue.

But the XT network marketing has changed the marketing landscape - initially for mobiles but also in preparing Telecom for the attack on its fixed-line business.

Telecom is talking about a "more integrated approach" to marketing under chief executive Paul Reynolds.

It is early days, but Telecom has been quick to claim victory - the company said that in the five days after the May 28 launch, it had signed 25,000 customers to XT.

Vodafone says early growth for XT is from Telecom customers moving over from its CDMA network, not from poaching Vodafone customers.

Vodafone spokesman Paul Brislen said the firm was happy with the perception of the market towards its brand.

But the XT Network will pose a threat to Vodafone's lead in mobile revenue, and potentially to its image.

Rosalie Nelson, a telecommunications analyst with the IDC consultancy, says the launch illustrates the new landscape.

Vodafone is now being perceived as the incumbent with Telecom previously offering limited 3G services.

For a long time it was young, smart Vodafone against the big, powerful behemoth Telecom, but brand perceptions have changed, Nelson says.

But while a dominant player in mobile, Vodafone still sees itself as the challenger brand.

"We look at overall market, not just mobile," says Brislen.

The brand name Telecom will always be associated with putting up your line rental every year, he says.

For many older customers that legacy of the bad old Telecom is still fresh in mind, but marketing consultant Jonathan Dodd says a lot of consumers do not remember the darkest days.

Other analysts point out that Vodafone has also had customer service issues - such as problems with its billing system.

Dodd says that broader debates about branding image are less likely to affect corporate decisions but marketing themes have an impact and retail consumers make choices based on image.

"Before number portability [allowing people to change providers and keep their mobile numbers] people would make a judgment on their caller based on whether they had a Telecom 027 or Vodafone 021 prefix," Dodd says.

027 was seen as more conservative, possibly older, whereas 021 customers were seen as more innovative.

Murray Campbell of marketing consultancy Baseline says XT Network has had a good start in public relations.

"The question is, can it resurrect the relationship with young New Zealanders?" Telecommunications Users Association of New Zealand chief executive Ernie Newman says Telecom is trying to be more widely accepted in the market.

"Vodafone in the early years did a terrific job depicting itself as young, devil-may-care and the natural home of the younger population.

"You have to refresh - the days when Vodafone effectively controlled the mobile market are

coming to a close," Newman says.

Telecom is a work in progress, but their high profile can be seen with events like the lighting of the Auckland Town Hall.

Insiders say there is an attempt to improve communications and move away from corporate speak, to change a culture where the promise to customers was different from the commitment of staff, and to be "less afraid".

Vodafone is known as young, slick and strong while Telecom wants to be seen as a New Zealand brand, honest and down to earth.

Vodafone's Brislen scoffs at Telecom's "Kiwi telco" claim while using Englishman Richard Hammond in its advertising, being led by Scotsman Reynolds, and having a high proportion of foreign ownership.

Indications are the new approach has already showed an improvement in the way Telecom is viewed.

But that increase has been from a very low base.

A third network - 2Degrees - is due to start in August.