Telecom misses wholesale target

Telco wholesales only 22% of broadband, sparking calls for intervention

Telecom may be crowing over its broadband uptake figures but the numbers don’t stack up for the wholesale side of the market.

Telecom set itself a target of 250,000 broadband residential customers, one third of which would be delivered via wholesale. Telecom has exceeded the total number of broadband customers, with 279,123 active residential users.

However its wholesale target has not been met, with only 23% of that total being delivered via wholesale.

Ernie Newman, chief executive of the Telecommunications Users Association, says New Zealand is slipping behind the rest of the world and that a wholesale market of 60,000 customers isn’t enough to sustain a viable ISP business in New Zealand.

“Government has to realise it’s an unhealthy level of market dominance and it has to strengthen the Telecommunications Act accordingly.”

Minister of communications David Cunliffe told Computerworld in December that the goal of only one third of customers delivered via wholesale was “on the light side” and he would take a dim view of Telecom missing that target.

Telecom, however, has declared itself well satisfied with the numbers, saying it intended the one third wholesale target to be one third of new customers, not of all customers.

Telecom claims broadband uptake rates in New Zealand outstrip the OECD average, however Newman disputes that, saying Australia has ten times the number of connections New Zealand has with only five times the population.

“I see no evidence that New Zealand is growing faster than the OECD average and if anything we’re coming off a very low base so we should be growing much faster than that.”

Telecom suggests this year will also see a change in the market’s pricing and structure with the introduction of new technologies, such as wireless broadband standard WiMax.

Meanwhile in the mobile space, Vodafone’s share of the cellular phone market continues to shrink as Telecom puts on record numbers of new customers.

Telecom added some 135,000 new mobile customers for a total of 1,808,000 last quarter. Vodafone in comparison picked up 68,000 new customers in the same quarter, reaching 2,024,000 according to its figures.

This gives Telecom 47.2% of 3,832,000 mobile customers. Vodafone is still ahead with 52.8%, down from 54% in the September 2005 quarter. The market share for Vodafone has steadily declined from 55.7% in December 2004, despite the company increasing its customer numbers by launching 3G network services.

However, Vodafone’s average revenue per user (ARPU) is still ahead of Telecom at $51 compared to $47. The ARPUs have declined for both telcos over the past five quarters, thanks to an increased in pre-pay customers who use phones from both Telecom and Vodafone.

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