New Zealand Telecoms Growing 5%

Research and Markets expects the New Zealand telecom market to grow by 5% from $8.1 billion in 2004 to $8.5 billion in 2005

January 27, 2005

5 Min Read

DUBLIN -- New Zealand remains absolutely at the bottom of the broadband penetration list, while some progress has been made, it will take three to four years to catch up with the rest of the world. Mobile user charges are amongst the highest in the world, wholesale facilities are truly appalling and the ongoing drama of number portability continues.

Research and Markets ( has announced the addition of 2005 Telecoms, Mobile and Broadband in New Zealand. to their offering

The broadband boom of 2005

The telecoms market is expected to grow by 5% from $8.1 billion in 2004 to $8.5 billion in 2005. The key focus of the market is rapidly shifting to broadband.

Three players, Telecom's Xtra, TelstraClear, and ihug, continue to dominate New Zealand's ISP market. The New Zealand market went through a period of rationalisation from early this decade, with a number of smaller ISPs closing down or acquired by larger players. The number of Internet users in 2004 reached 2.45 million, which represents only a 7% increase on the previous year. By late 2004, New Zealand had an estimated 900,000 Internet dial-up subscribers and 450,000 host computers. New and existing subscribers are beginning to move from dial-up to broadband as broadband prices are starting to become more competitive with entry level prices of $39.95 for 256Kb/s services.

The broadband service provider market is dominated by Telecom, with a number of players offering some resistance including ihug, TelstraClear, ICONZ and Wave Internet. Competition is mainly coming from the reselling of their Telecom's ADSL services. Since the introduction of a new flat-rate broadband plan, the uptake of new customers has increased significantly. In late 2004, there were 165,000 broadband subscribers in New Zealand, approximately 10,000 of these were cable broadband subscribers. Competition however in broadband services still remains a problem with most competitors of Telecom merely offering a re-selling of their ADSL service. The CBDs of the major centres - Auckland, Wellington and Christchurch - are well served by a variety of broadband technologies. However, outside of these areas services are more limited.

Wireless broadband alternatives

Wireless broadband is increasingly being seen by New Zealander's as a serious alternative to fixed broadband services, usage is increasing steadily from a low base. Wireless broadband is a niche, not a mainstream market. In areas where fixed networks are economically viable, wired will always win over wireless. Woosh Wireless is currently rolling out a national network and already provides its services in Auckland, Wellington CBD and Invercargill CBD. By late 2004, there were less than 15,000 wireless Internet users in New Zealand, Woosh Wireless had close to 10,000 of these users.

Telecom loosing the mobile battle

The current mobile market is a duopoly of Vodafone New Zealand and Telecom Mobile. The pair operate the only cellular networks in the country. Vodafone took the number one spot in mobile subscribers in New Zealand last year and in late 2004 had 56% of the subscriber market. Telecom plans to have their 3G service (branded as T3G), available by the end of 2004. Customers will be able to sign up for a single service provider for high-speed access via mobile phones, WiFi hotspots and fixed line broadband. In late 2004, Vodafone was progressing well with the upgrade of their network to 3G capabilities and was well on track to deliver 3G capable products and services by the middle of 2005 in Auckland, Wellington and Christchurch.

New Zealand's Digital TV success story

New Zealand has one of the highest digital TV penetration levels in the world. Digital television is currently broadcast in New Zealand by Sky on a satellite platform in the DVB standard, which also rebroadcasts some radio services. Apart from trial digital television broadcasts in Auckland on BCL's terrestrial platform, digital television services have yet to be established. There are over 610,000 Pay TV subscribers in New Zealand. Pay TV penetration has now reached 50%. Television advertising revenues have continued to increase throughout 2004.

Telecom's 2012 vision

Telecom has responded with its network vision to 2012. In a plan released in late 2004 for its vision to 2012, Telecom has outlined a plan of the next phase of its $1 billion investment in a Next Generation Network (NGN) and the new services it will enable for business and residential customers. The company announced that it will be able to significantly rationalise the 'old' network structures turning it into a single IP based network combining voice, data and video. The challenge for New Zealand will be to ensure that this economic and social development of national importance will not be monopolised by Telecom.

Regulations are faltering

Telecom proofs to be too large to regulate which is having a disastrous effect on competition and innovation in New Zealand. The Commerce Commission is underfunded and underpowered. The New Zealand Minister of Communications identified timeliness, monitoring, and enforcement, as areas for improvement in the Telecommunications Act as he his impending review of the Act will attempt to go beyond the more superficial tidy up previously declared.

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