Consumer mobile telco 2degrees is pushing into the business market with fibre broadband. It’s also eyeing up the Internet of Things – Heather Wright reports

Fibre broadband and Internet of Things (IoT) technology both feature big in Andrew Fairgray’s plans for 2degrees. The telecom company’s new chief business officer, is charged with growing 2degrees’ fledgling business and government market share and sees a strong role for both in this.

Fairgray’s appointment last September highlights the telco’s full-service business telco push – Fairgray is the former head of corporate and government sales at Vodafone.

“We have a strong brand and a good understanding of the consumer market, but we’ve got some work to do to leverage our brand in the business market,” he says. “The business part of our business is still in start-up mode.”

When 2degrees launched, in 2009, after nine years of planning, it was into a near saturated market. It then followed a fairly traditional path: a pre-pay then post-pay consumer service, followed by SME (small and medium enterprise) offerings. In 2012, then chief executive Eric Hertz announced plans to enter the fixed-line market and so more aggressively compete against then Telecom (now Spark) and Vodafone. It offered fixed-line phone and internet services, as well as a mobile service.

Come 2015, it snapped up internet provider Snap, with whom it had previously partnered. The purchase brought 2degrees a suite of assets in the enterprise market, particularly in the fixed-line space, along with home phone and home broadband services.

It’s a suite the company has continued to build on. It now offers a nationwide data network, plus direct access to major data centres and cloud providers. The latter include Microsoft Azure and Amazon Web Services. Managed services, cloud security and unified (voice, data and internet) communications services, both over the Internet and in the cloud, are also included in its business offering.

“We have a number of DHBs (District Health Boards) and government agencies with whom we have a very strong position managing fixed networks, plus an opportunity to educate the market on our mobile assets,” says Fairgray.

He is coy about the size of 2degrees’ business customer base and market share, but says he plans to double the business within the next three to four years.

Cosmetics and car companies now on board

The company’s customers include cosmetics company the Body Shop, which uses 2degrees’ mobile services – with landline on mobile – and broadband for its retail stores. It also provides mobile and network connectivity services for the Ministry for Primary Industries.

Another customer is Thrifty Car Rental and Dollar Car Rental (sister companies) for whom 2degrees provides a nationwide data network across more than 30 sites using Chorus connectivity. This network supports a full suite of managed internet, WAN (wide area network), security, Wi-Fi and mobile services.

In addition, engineering company Land Development and Engineering uses 2degrees for its mobile connections and WAN services across its four sites, as well as for broadband and cloud security.

“Once business customers join, they love us,” says Fairgray. He adds that they typically set 2degrees’ net promoter score at four times that of its two main competitors. “But there’s a perceptional gap that we have to work at addressing.”

However, Fairgray believes the current wave of change – moving us from fibre broadband to IoT to 5G mobile – sweeping through the telecoms sector will benefit 2degrees.

Fibre broadband is “one of the most exciting opportunities” for 2degrees, he says. It puts the company on a level playing field with its competitors.

“For pure physics, nothing beats a piece of fibre. It creates the highway for us to go and add applications as we grow our business. It’s like building the best foundation you can for your house, and then, as you find business applications you know will stand the test of time, these can stand on this great foundation.”

Chorus figures show 44 percent of all businesses with fibre broadband running past their premises have yet to connect. This gives 2degrees a big greenfield opportunity, but, Fairgray says, the company isn’t just looking for the new connections.

“Once you have fibre in, the ability to change is a seamless one.

“There are also the 56 percent who have fibre but probably think they have to stay with their incumbent supplier.” These are the customers 2degrees is focusing on with “affordable quality services” and, Fairgray says, once customers understand the benefit of 2degrees’ customer service, he is confident they will be interested.

Its customer service is building 2degrees’ business proposition. The company – with its ‘Fighting for Fair’ tagline – has price parity. It can offer bundled deals like its competitors, so this leaves service as the differentiator, says Fairway. The company ranks highly in consumer reports on service.

However, Fairway doesn’t rule out acquisitions to bolster its fibre play – or other growth opportunities.

“I will always continue to look at opportunities so we can grow,” he says. “It’s about finding the opportunity that supports where we’re trying to take the business. The opportunity around fibre creates opportunities for us to talk to companies that may have built their business on other access mediums in the fixed world.”

Fibre will also be a factor in another growth opportunity for the company: IoT.

Using telecoms to stop the cone wars

Fairgray says 2degrees is looking to harness IoT as a value-added service for its customers while also leveraging the technology to store data. Initially, this might be data from security cameras, but could expand to include air conditioning, movement flow, personal security and more. (IoT networks allow for the automatic transfer of a variety of data.)

“We have a significant opportunity to define what a smart city means from a New Zealand economic benefit perspective,” he says. “Take the cone wars in Auckland (which saw people blocking public parking with traffic cones in some streets last year) – we could work proactively with the council on leveraging telecommunications to get ahead of that curve so people could work from home or from pop-up locations, creating environments before cone wars occur and people lose hours of travel time trying to get to the CBD.” (Frustrated residents have taken to using traffic cones and bins to stop the increasing numbers of commuters using their streets as public car parks.)

Water and water infrastructure management are also areas where IoT technology could be used and which Fairgray is enthusiastic about. He notes Wellington’s recent water pipe woes.

A head of IoT is being brought into 2degrees to focus on building an IoT ecosystem with partners.

Six months into his role at 2degrees, Fairgray has plenty of plans for his division, including an expansion of the company’s regional footprint, using partners. “I firmly believe people buy from people they trust who operate within their region,” he says.

He is also focused on ensuring “product hygiene”, ensuring products are relevant to their market, priced appropriately and have clear lifecycle management processes in place to enable both cross-selling and up-selling “in a transparent, consistent manner that makes sense”.

“As we are going out and growing this great opportunity, the best thing we can do is win at mobile first. It’s simple, well understood and we have great credibility in this market that people quite simply get.

“Then, with this, we can start building trust and confidence so we can look at selling broadband. And once we start selling broadband – and I’m referring to fibre here – that will enable mobility in a holistic sense.

“Once we get to that stage, then we can look at what potential extra applications we can sell to add more value.”