2degrees enters a new phase

In just six months 2degrees has defied the critics and acquired over 200,000 subscribers, showing that the New Zealand market is ready to embrace a third mobile player.“There was a lot of scepticism about launching a national network in a country with over 100% mobile penetration and in one of the toughest regulatory environments in the OECD,” says 2degrees chief executive Eric Hertz. “But we’ve made a good start and we intend to keep building on our initial success.”Hertz was recruited to become 2degrees’ CEO because of his extensive experience in telecommunications both in the US and around the world. He began his wireless career at McCaw Cellular in 1978, and has held positions as Regional Vice President of AT&T Wireless and COO of US-based Western Wireless Corporation. His role prior to joining 2degrees was as CEO of Seattle-based Zumobi, one of the leading US mobile application developers for next-generation mobile devices such as iPhone and Blackberry.

Hertz says his experience in every aspect of telecommunications – from running a mobile network in Central America to developing high-end applications for the burgeoning smart phone market – is proving invaluable as CEO of 2degrees.

The company launched with a simple, straightforward pre-pay offer in August last year – halving the standard pre-pay rates offered by the incumbents to a low 44c a minute for calls and 9c for texts. Its marketing strategy was to make it as easy as possible for customers to join. 2degrees sells via 3rd party retail stores such as Dick Smith Electronics, Whitcoulls, groceries and service stations. Customers are also encouraged to go online to the 2degrees website to top up, port their numbers, as well as find out about deals such as 2c texts to other 2degrees customers, 22c calling to 22 countries and learn more about getting the most from their 2degrees mobile. The company has also defied current market practice, by basing its call centre in New Zealand. The 80-seat centre is open 24 hours a day, seven days a week and even more importantly, it’s free for its customers to call. Customer care is supported through a strong online social media presence with over 24,000 Facebook fans talking about 2degrees and enjoying interactive engagement from the 2degrees team. 2degrees’ owners Trilogy International, Hautaki Trust and private equity investors have already invested $250 million in building the national coverage enjoyed by its customers. Hertz says 2degrees has plans to increase its cellphone coverage further, as well as switch on its 3G capability to improve its data offering to end-users, thereby enabling it to compete more effectively.“We started out by addressing the pre-pay market, where there has historically been dissatisfaction among New Zealand consumers. We’ve certainly succeed in this space and it’s our goal to be just as effective in the high-end consumer market with the roll-out of our 3G network this year and the introduction of new innovative pricing packages,” Hertz says.It hasn’t all been plain sailing though, and high on 2degrees’ to-do list has been to promote a level playing field for competition. 2degrees has been at the forefront of the debate around whether regulation of Mobile Termination Rates (MTR) is right for New Zealand. Above-cost MTRs present an extremely effective tool for large mobile networks to stave off efficient competition by smaller networks, and are regulated in almost all overseas markets. Having that fact recognised in New Zealand has been a long and intense battle. New Zealand consumers will be the main beneficiaries of all this effort. Levelling the playing field through cost-based MTRs will facilitate greater competition, more innovation and the long-wanted lowering of prices in the mobile market.“We’re delighted with the progress we’ve made in such a short time and we’re certainly looking forward to building on our initial success,” Hertz says. “We have a lot of exciting new products and services in the line-up for our customers.”