ComCom report sees increase in broadband, mobile value for money

The regulator gives itself a pat on the back. Is it deserved?
Paul Brislen

New Zealand consumers are receiving increased value for money across a range of telecommunications services, the Commerce Commission’s latest annual telecommunications monitoring report has found (see statistics below).

Recent governments have certainly taken several steps to make the telco market more competitive, from facilitating cheap spectrum for the company that became 2degrees to splitting Telecom into retail (Spark) and wholesale (Chorus) companies.

And the commission has contributed by badgering down Chorus' copper pricing (if not as much as it first wanted to) and reducing mobile termination rates (what phone companies charge each other for calls) to next to nothing.

Does it deserve to give itself a pat on the back with its latest report?

Yes, say pundits.

InternetNZ chief executive Jordan Carter says while prices haven't come down for all services, users do get more bang for their buck these days.

Overall, the trends are encouraging, he says.

However, he qualifies, "The challenge of customer service remains. People want to know dealing with their telco of choice will be simple, quick and right first time. There is more work to do on that front."

A separate Commerce Commission report found Spark and Vodafone were the two most-complained-about companies in New Zealand, across all industries – and in fact, full stop.

Although disputing the report's methodology (some of the blizzard of complaints that landed on Spark's doorstep were better aimed at Chorus, for example), Spark has gone on a service-and-support hiring spree recently, spending $13 million in the past financial year to beef up its help-desk operation.

Tech commentator and former Telecommunications Association chief executive Paul Brislen says entry-level broadband contracts in New Zealand are competitively priced at about $65 and offer superior performance compared to Australia thanks to the UFB rollout.

He says 2degrees' entry has been a huge factor in reshaping the mobile market.

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Rural broadband remains a pain-point, Mr Brislen says. The Rural Broadband Initiative has upgraded networks but not everywhere, and competition has not increased outside cities and towns. 

There are a couple of nuances in the good news below, too.

Industry investment actually dipped year on year (from $1.59 billion to $1.77 billion).

And while mobile revenue passing landline revenue is in part a measure of the rise of smartphones and mobile data, it is also partly a reflection of how Spark's (once cash-cow) landline voice-calling business has fallen away.

Report highlights
“About 74% of households now have a fixed-line broadband connection and there are 5.8 million mobile devices. Nearly all phones sold now are smartphones with internet connectivity,” telecommunications commissioner Stephen Gale says.

“The cost of internet use has dropped over the past year with up to four times the data included at the same price points. 100GB in a fixed-line voice and broadband plan can now be bought for $65, $10 less than a year before. At the high end, a 100Mbps fibre voice and broadband plan with unlimited data costs $90 per month, 19% less than the equivalent in Australia," Dr Gale says.

“Average broadband speeds have also been increasing thanks to a significant boost in fibre uptake, with fibre connections growing from 197,000 to 368,000 in just one year. Those moving to fibre generally get all the speed they need, while congestion is also reducing on the copper network.”

Mobile services are also quite accessible in New Zealand. An entry-level mobile plan with 50 minutes of calling and 100MB of data – enough for messaging and online banking etc – is priced at $13 a month.

“Broadband and mobile service prices in New Zealand compare favourably internationally and it is pleasing to see our telco firms being responsive to the public’s consumption habits in terms of the pricing plans they have in the market. However, telecommunications consumers report a high level of problems and we believe there is plenty of room for improvement in customer service,” Dr Gale says.
Other highlights in the report include:

  • As at March 2017 the ultra-fast broadband fibre network is now passing 1.1 million homes and businesses, with 368,000 connected;
  • The average monthly household broadband data consumption increased from 48GB to 69GB, and is growing at 46% a year;
  • Mobile calling – now averaging 146 minutes per person a month – has overtaken fixed-line calling; 
  • Industry investment reduced to $1.59 billion from a record high of $1.77 billion in 2015;
  • Mobile revenue increased to $2.68 billion in 2016, surpassing that of fixed line at $2.53 billion; and 
  • Total telecommunications retail revenue increased for the first time in four years to $5.22 billion in 2016, up from $5.11 billion in 2015 and $5.17 billion the previous year.

Read the full report here. (PDF)

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