NZ telco market worth $5.5b - ComCom

The total fixed line and mobile telecommunications revenue in New Zealand for 2008/09 is estimated by the Commerce Commission to be $5.5 billion.

The Commission today released its annual telecommunications monitoring report which delves into the revenue and investment trends in the industry in the past year. To balance the billions in revenues, the telcos invested $1.605 billion in 2008/09. The report notes that this is a significant increase on 2005/06 when investment was $917 million.

Telecom is the biggest investor, accounting for 71% of the investment in the past three years in both fixed line, with its Fibre to the Node programme, and in mobile, with $574 million spent on the XT Network. Other notable investments were those made by 2degrees ($250 million), Vodafone extending its 3G coverage to 97% of the population, and Vodafone, Orcon and TelstraClear investing in unbundling lines in local exchanges.

However the Commerce Commissioner Ross Patterson told the audience at the TUANZ Telecommunications Day this week that while investment is increasing, revenue is falling. A situation faced by telco industry worldwide, he says.

“The current investment represents to a certain extent a catch up in past under-investment, stimulated by the competitive environment. But the question remain: how long is this sustainable? Will revenue streams in the future reflect the investment that is going to be made, and allow for an appropriate rate of return?”

Patterson points out that while Chorus claims it can supply broadband speeds in excess of 10Mbps, notable overseas researcher Akamai reports the average speed in New Zealand is 2.7Mbps. Patterson suggests that New Zealanders are unwilling to pay for faster speeds because they don’t see the benefit. He notes that in Europe demand for high-speed broadband packages is driven by HDTV, but these services are not provided by telcos here. The Commission intends to investigate this issue further in the upcoming year.

Meanwhile, here’s a snapshot of the market:

• 1.9 million fixed line connections to 31 December 2009
• 4.9 million mobile connections (mobile penetration rate rose to 114%, which is in line with other jurisdictions) as at 31 December 2009. Approximately two-thirds have pre-paid subscriptions.
• Share of mobile market as at 31 December 2009 is estimated at Vodafone 49.6%, Telecom 46.6% and 2degrees 3.8%.
• The Commission estimates there are currently less than 100,000 end-users supplied with MVNO connections (that is the mobile services resold by CallPlus/Slingshot, TelstraClear, M2, Compass, Black and White, Digital Island).
• In New Zealand on average of 8 texts a day per subscriber are sent.
• National fixed line calls have stayed at around 3 billion minutes per year over three years, and fixed-to-mobile calls at around 1 billion minutes per year.
• Broadband connections increased from 480,000 in 2005/06 to 1 million in 2008/09.
• Telecom’s competitors increased their share of the retail broadband market from 26% in 2005/06 to 39% in 2008/09.
• Total wholesale revenue for 2008/09 was $1.3 billion with 72% in fixed line wholesale services.
• Unbundled lines grew from 3,000 at 30 June 2008 to 47,000 as at 31 December 2009, with the growth in unbundled lines in New Zealand after 18 months better than international experience.