Competition in all telecommunications markets has increased since 2006 and consumer choice and service quality have improved while prices have fallen, according to a new Commerce Commission report.
However, the market shares of incumbent suppliers remains high and markets remain concentrated when compared with others such as the United Kingdom and Australia, says telecommunications commissioner Ross Patterson.
Growth in the overall telecommunications market also appears to have stopped and even reversed, with total retail sales in the sector falling from $4.92 billion in 2005/06 to $4.74 billion in 2008/09, meaning providers wanting to grow need to focus on winning market share.
“Alternative providers of broadband services on Telecom’s network have increased their market share from 24 percent to 37 percent in the last three years," Patterson says. "Over the same period, broadband uptake has doubled and New Zealand has improved its position when compared with 30 other OECD countries from 22 in 2006 to 18 by 2009.
"Uptake of broadband is now at or around the OECD average and broadband speed availability and quality have improved significantly."
The Commerce Commission's 2009 telecommunications monitoring report (pdf) analyses the state of New Zealand telecommunications markets and progress seen since 2006 changes to the Telecommunications Act.
“In the mobile market the entrance of a new network operator, 2degrees, has had an immediate impact in terms of consumer choice and competitive offering. Although there is evidence that competition in the mobile market is increasing following the launch of 2degrees, mobile voice usage remains low by international standards," Patterson says.
"In addition, price and usage vary significantly depending on whether calls or text messages are sent to another subscriber on the same network or to a subscriber on a different mobile network. On the positive side, both Telecom and Vodafone have upgraded their networks for 3G capability, and a number of mobile virtual network operators have entered the market."
Mobile vs fixed line connections
Alternative fixed line voice providers have increased their market share in terms of connections from 8 percent to 25 per ent over the three years.
Key market trends include:
— Increased total investment in telecommunications over time from $917 million in 2005/06 to $1.693 billion in 2008/09.
— Sustained growth of fixed broadband connections from 480,000 in 2005/06 to more than 1,000,000 by the end of 2009.
— Increasing broadband performance with most customers on full speed plans.
— Constant retail revenue across the telecommunications industry as a whole.
— Increasing revenue from fixed line monthly charges and decreasing revenue from fixed line calling.
— Decreasing revenues from mobile voice services and increasing revenues from mobile data services.
— Early signs of fixed-to-mobile substitution with total mobile call minutes growing strongly while fixed line voice minutes are decreasing.
Total telecommunications revenue (retail and wholesale) by source