Australian analyst fears for NZ Internet, telecomms market

Telecom New Zealand's 'iron grip' on the local loop is helping kill innovation and competition in broadband, Internet and e-commerce services, according to a report to be launched today.

Telecom New Zealand's "iron grip" on the local loop is helping kill innovation and competition in broadband, Internet and e-commerce services, according to a report to be launched today.

Australian telecommunications analyst Paul Budde says Telecom increased its Internet market share from 45% to 48% and expects it to grow to over 50% in 2000. He warns that Telecom's taking of equity in EDS "could be the start of domination in the e-commerce market".

He says the "new Internet access monopoly" of 0867 also represents a threat to innovation and growth.

Budde says his new report, ' Telecommunications and Information Highways in New Zealand and the South Pacific Islands', shows that the overall market has "further deteriorated" since his report last year. Growth in the local telecommunications market has been only 1%, compared to 10% in Australia.

Budde says "the sustainability, let alone growth, of competition in fixed residential market is under serious threat" and is predicting that mobile will take over fixed calls in the local loop.

He describes the mobile market's growth from 17% to 30% penetration in one year as "remarkable" and credits the arrival of Vodafone with forcing prices down between 20% and 30%.

Budde says the chief casualty of New Zealand's difficult market has been Clear Communications, but "independent new telcos" have also suffered.

Budde says New Zealand government policies are, "in comparison to other countries, outdated and in need of overhaul" but also believes Labour's policy reform proposals are "inadequate and too slow for this fast-moving industry".

The report costs $A425 and is available from Paul Budde Communication at www.budde.com.au

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