Unbundling has gained quick traction in New Zealand according to the Commerce Commission's latest quarterly telecommunications report.
Between the launch of local loop unbundling in May, the report says, and the September reporting period, telecommunications companies purchased over 12,000 lines from Chorus, which they are using to provide competing retail broadband and voice services to customers.
The unbundled local loop is a regulated product sold by Telecom’s network operator, Chorus.
The report says Telecom’s core revenues fell by $6 million from last quarter to $799 million.
"While most of Telecom’s revenue categories were static or showed a small decline, mobile data revenue increased by $2 million to $58 million," it says.
Almost all broadband DSL connections are provided over Telecom’s network and one
third of these were wholesale connections provided to another retailer, it says.
"Telecom’s retail connections have been growing more slowly than the total DSL market. This has resulted in Telecom’s share of the retail DSL market decreasing from 76% in June 2006 to 66% in September 2008," the report says.
Telecom’s share of the growth in retail DSL connections, however, has fluctuated markedly over the last two years.
"The recent downturn has been the largest experienced by Telecom, with its increase in retail DSL customers equal to only 6% of the growth in retail customers for the quarter. This could be due to the end of its $16.95 'broadband at dial-up prices' promotion and the high charge for extra data usage imposed on customers of the Basic broadband plan pushed in this promotion," the Commerce Commission says.
The Commission notes the data charges for extra data used on Telecom’s Basic plan are equivalent to around $20 a gigabyte compared to the $1 to $5 a gigabyte that other popular ISPs charge.
The data allowance for the Basic plan was only 200MB in the September quarter but increased to 500MB in October 2008.
In the mobile market, however, progress appears slow.
"The main mobile plans benchmarked have not changed in price in $NZ over the last 18 months ... for the most part these plans have continued to rank in the bottom quartile of the 30 OECD countries surveyed," the report says.
The Commission notes it has not benchmarked Vodafone’s three Base plans for some time because it had concerns over their accessibility. It has benchmarked these and a TelstraClear plan separately this time "because it does not consider these to be mainstream plans".
"In June 2008, Vodafone made changes to its website to allow customers to be able to subscribe to the Base plans over the internet without having to visit a retail outlet. The changes effectively made the Base plans ‘internet only’ plans. When Teligen became aware of this fact it informed the Commission and Vodafone that it intended to exclude the Base plans from future benchmarking as it did not knowingly benchmark internet only plans.
"In response, Vodafone made the plans available in store again in the September quarter. However, the plans are still not promoted or listed in store displays. Furthermore, the Commission understands that while some commission is paid for their sale, it is less than for other Vodafone plans.
"The plans appear to be constructed so as to optimise Vodafone performance plan performance under the OECD mobile baskets," it says.
The commission found the two Vodafone Home Phone Wireless plans to be the cheapest plans for all three fixed line "baskets" it benchmarks. However, for plans that are available nationwide, the Vodafone fixed line plan is cheapest for the low user basket and the TelstraClear resale plan the cheapest for the medium and high user baskets.
Telecommunications Users' Assocaition chief Ernie Newman reacted to the report saying "New Zealand mobile phone users are paying dearly for a decade of duopoly.”
“Kiwis are typically paying between 23% and 46% more for mobile calls than the average of the OECD countries,” Newman says. “We are in the dearest half dozen OECD countries in terms of mobile phone pricing and this is costing the average Kiwi hundreds of dollars each year.