KEY POINTS:
A third choice for mobile phone users came a step closer yesterday as Vodafone and NZ Communications announced a roaming deal.
Under the terms of the agreement, aspiring mobile operator NZ Communications - formerly Econet Wireless - will be able to use Vodafone's 2G network in areas where it has no network coverage.
NZ Communications chairman Bill Osborne said it was a big step for the company, which has spent almost seven years getting a mobile network off the ground.
NZ Communications was formed in 2001 as a commercial partnership between Hautaki Trust, a pan-Maori trust holding a third-generation spectrum (3G) radio frequency given to it by the Government, and African-based mobile company Econet Wireless.
The company earlier this year signed a deal with Chinese telecoms equipment maker Huawei, which has built a 10 cell site trial network in Auckland.
Vodafone chief executive Russell Stanners said it was great to get the roaming deal in place.
The company - which has just over 50 per cent of the mobile market - has also submitted an undertaking to the Commerce Commission as part of a process of potential regulation of the mobile market.
Stanners said the terms and conditions offered to NZ Communications were broadly in line with those in the Government undertaking.
Osborne said NZ Communications hoped to have its mobile service in operation by the end of next year, aiming to build in the three main centres.
"We're really heads down and building now," said Osborne.
"At the moment, all the building is going on in Auckland, but very shortly we'll be commencing building in Wellington and Christchurch."
Osborne said the company would offer "some of the basic services" but wouldn't be drawn on what the specifics of those might be.
Telecommunications research manager at IDC, Rosalie Nelson, said a roaming agreement was critical for NZ Communications to get its network off the ground.
"What it allows is a 'pay as you grow' type of strategy," said Nelson.
"They can build in the areas where it is commercially viable but they don't have to provide a national 97 per cent network coverage because the cost of that is absolutely prohibitive."
Nelson said the major network cost NZ Communications would incur was building cell sites, including the necessary resource management approvals and negotiating to use site real estate.
"That's why co-location agreements become such a core part of the proposition - being able to use other companies towers," said Nelson.
Co-location or co-siting allows an operator to attach network equipment to or alongside an existing cell tower.
Osborne admitted co-location was the next challenge NZ Communications was to face.
He said there was an agreement in principle with Vodafone but the terms were yet to be negotiated.
The company already had a co-location agreement with Telecom but had failed to establish any co-location sites, said Osborne.
Nelson said any new entrant would cannibalise the existing mobile market and Vodafone's customers will be targeted due to the compatibility with NZ Communications proposed network.
"In a commercial sense there is actually very little incentive for the lead player to provide access to virtual network operators or to allow co-location and roaming, so a very fair question for Vodafone is: 'Are you doing this in order to mitigate against regulatory imposition?'."
She said regulation was likely to go further than commercial arrangements Vodafone would want to reach.
A Vodafone spokesperson said avoiding regulation was a component of reaching a deal, but added that roaming allowed the company to maximise the capacity of its network.
Osborne said the board had been in discussions about appointing a chief executive and expected to begin a search in the New Year.
NEW ENTRANT NZ
* Communications used to be called Econet Wireless.
* The company is a partnership between Hautaki Trust, pan-Maori trust, and African-based mobile operator Econet.
* Hautaki owns third-generation spectrum (3G) radio frequency given to it by the Government.
* Private equity players injected $45 million into the telco in March.
* The board is chaired by former All Black and Quotable Value chief executive Bill Osborne.
* A company chief executive will be appointed in the New Year.
* NZ Communications aims to launch mobile phone services next year.
