Orcon to enter cellphone market

Mobile Internet provider Orcon will launch a mobile service today and promises to shake up the market by scrapping fixed-term contracts.

The state-owned company, which is reselling Vodafone's network, hopes to sign up tens of thousands of mobile users in the next year.

Orcon customers will not have to commit to a plan for a fixed term, such as 12 or 24 months, and can switch plans or providers without incurring penalty fees.

Customers on Orcon's basic "purple" plan will pay 69 cents per minute for calls, but no set monthly fee. Other plans offer 60 minutes for $29.95 a month, 120 minutes for $49.95, and 180 minutes for $69.95 a month.

Texts cost 20 cents but customers can opt to pay $11.95 a month for 500 texts to any network, or $9.95 a month for 2000 texts to customers of Orcon, Vodafone and other operators reselling Vodafone's network, with the exception of 2degrees, which uses its own network as well as Vodafone's.

Chief executive Scott Bartlett said consumers locked into fixed-term contracts incurred huge penalty fees if they wanted to switch providers or plans before their contracts expired.

"We want to have customers, not prisoners. If you want to be locked down for two years, go steal a car."

Ernie Newman, chief executive of Telecommunications Users Association, said Orcon's axing of fixed-term contracts was an "innovative" move.

"It's a very dynamic and changing market and not having a long-term contract is very advantageous these days both for individuals and their own flexibility and also for the continuing emergence of competition in the market."

Orcon's plans would be attractive to a lot of people and he expected other players would respond. "Consumers can only win out of that."

Orcon's launch would not impact the market as dramatically as 2degrees' entry, as it was "bulk-buying" minutes on Vodafone's network and repackaging them into plans, while 2degrees had built its own network, he said.

Consumer New Zealand chief executive Sue Chetwin said long fixed-term contracts could be onerous and had been an issue for XT customers wishing to switch providers when that network suffered a series of failures earlier this year.

Mr Bartlett said the "purple" plan was unique, and Orcon's mobile broadband plans were the cheapest in the market. "You can get no contracts on data plans with Vodafone but they're more expensive."

Mobile broadband plans – for customers using mobile internet on their laptops – start at $29.95 a month for 500 MB and go to $69.95 for 4Gb.

Customers accessing the internet on their mobile can download 10 megabytes of data a day for $1 and pay 50c for every extra megabyte, or pay $49.95 a month for one gigabyte.

The company would look to offer pre-pay plans "later on", and would bring in smartphones, including "Android" phones, often considered too niche or expensive by other players, Mr Bartlett said.

Orcon is launching with four handsets, including the HTC HD Mini – and customers signing up to most plans will receive a discount on them or an account credit if they stick with their existing handset.

Customers who leave Orcon within three months of signing up will be required to pay the subsidy or credit back.

Customers can transfer their existing mobile number or get an "020" Orcon number.