New Zealand - regulation

Regulator says competition increasing in NZ telecommunications

The prices paid by many New Zealanders for mobile and fixed line services are high by international standards, the Commerce Commission says.

But Telecommunications Commissioner Ross Patterson said the 2007 telecommunications monitoring report showed average retail prices falling in all sectors analysed, apart from monthly line rentals.

The improvements were partly in response to recent regulatory reforms, Dr Patterson said. But many key markets were still characterised by limited competition, which the commission's strategy was designed to increase.

The commission said that among key findings in the report were that mobile connections had risen by 12 percent, with mobile penetration reaching 104 percent by the end of December.

Mobile calling minutes increased by 15 percent for the 2006/07 financial year, although average mobile calling per user remained relatively low by international standards.

The introduction of new calling plans had benefited some mobile users, particularly through cheaper calls to selected users on the same network, the commission said.

But Organisation for Economic Co-operation and Development (OECD) benchmarking indicated others were still paying high prices by international standards. Considerable progress was made towards new entry in the mobile market, with NZ Communications (formerly Econet) starting to build its own network and signing a roaming agreement with Vodafone.

But progress with mobile co-location was slow, while mobile-to-mobile termination rates for calls and texts appeared to be above cost, the commission said.

That may hinder the development of competition in the mobile market. In the fixed line market, calling prices were reducing but Telecom's standard residential plans did not rate well in OECD benchmarking and slipped in ranking over the year.

That was largely due to the annual rise in the monthly line rental, and the relatively high cost of fixed-to-mobile calls, which made up an estimated 44 percent of calling costs for both households and businesses.

New Zealand did compare favourably to other similarly developed countries on the price of residential broadband services, with prices for low, medium and higher users all ranking in the top third of the plans surveyed.

The broadband market continued to grow strongly and competition was healthy. Telecom retailed around 60 percent of all broadband connections, while in the retail market for broadband over phone lines, Telecom's competitors' share of the growth in connections rose to over 70 percent for the final quarter of the year.

The commission said its local loop unbundling determination had resulted in competitive bundled broadband promotions appearing in the market in the latter half of 2007.

The first unbundled lines became available in early 2008, and offered competitive prices for a bundle of fixed line, national calling and broadband services, coupled with unconstrained data speeds and high data caps.

It was progressing sub-loop unbundling in response to Telecom's cabinetisation plans which would reduce the number of lines in exchanges that could be accessed by Telecom's competitors, the commission said. Sub-loop unbundling would allow other telecommunications companies to access lines that were fed directly from Telecom's distribution cabinets.

It believed that telecommunications markets were likely to start to show further gains in competitiveness in 2008 with the implementation of local loop unbundling and the entry of a third mobile network operator.