NZ telecomms data market to explode: Budde report

New Zealand's telecommunications market, which grew 10% last year to $4.5 billion, will double or even triple within the next 10 years, says Australian telecommunications analyst Paul Budde. However, less than 20% of that revenue will be traditional voice services and less than 5% of that traffic will by that time be voice-related.

New Zealand’s telecommunications market, which grew 10% last year to $4.5 billion, will double or even triple within the next 10 years, says Australian telecommunications analyst Paul Budde. However, less than 20% of that revenue will be traditional voice services and less than 5% of that traffic will by that time be voice-related.

Budde, in his recent “Telecommunications and Information Highways in New Zealand” report, says the vast majority — 95% — will be data traffic.

The report says new IP-based solutions have led to an explosion of virtual private networks (VPNs), offering both remote data access and LAN-to-LAN connections and all leading ISPs in the country have implemented VPN services or are in the process of doing so. The report also suggests New Zealand’s take-up of ISDN has been minor compared to other countries. In 1996 there were around 1000 ISDN customers followed by a growth in numbers of 140% after price cuts in 1997. An increase in the number of network equipment suppliers offering ISDN compatible equipment has further driven up demand for services. The report points out, however, that following price cuts, the Ministry of Commerce commissioned the ISDN pricing study which revealed that charges here are significantly higher than in other similar markets.

New Zealand is a leading user of electronic commerce in business, the report suggests. It says New Zealand leads the way in the use of smartcards and value-added Eftpos transaction systems, but the report points out that there are complaints from electronic payment companies about service costs.

In the voice market, the report found Telecom’s fixed market share dropped to 64%; there was little growth for Telstra and Clear, with all gains in the market going to other service providers; fixed call costs were down but the number of calls increased.

Mobile revenues were up for both Telecom and BellSouth, with total mobile revenue growing 38%. However, the penetration of mobile subscribers (17%) in New Zealand is well below world benchmarks because of high call charges the report says, but PCS licences in the hands of competitors could see a drop in mobile call charges of 50% to 80%.

Budde says New Zealand’s open regime has made access to the market very easy for newcomers but because of Telecom New Zealand’s de facto monopoly, none of the 25 players in the voice market have been able to establish a successful business until this year.

Telecom spokesman Clive Litt has accused the report of being flawed.

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