2013 New Zealand - Telecoms, Mobile, Broadband and Forecasts

Network access technology pricing will hamper long-term uptake

BuddeComm’s New Zealand - Telecoms, Mobile, Broadband and Forecasts annual publication provides a detailed overview including statistics and analysis of the regulatory, infrastructure, fixed voice and broadband, mobile voice and broadband and the digital media sectors of the New Zealand telecoms market. An overview of the key market players in the markets is also provided, as are selected market forecasts.

The New Zealand Ultra-Fast Broadband (UFB) and the Regional Broadband Initiatives (RBI) are now both in deployment across the countryside, yet it will be many years for these developments to be completed. But these infrastructure deployments will set the stage for many new developments utilising these high-speed broadband networks.

But uptake of residential fibre has been slow as these new networks must compete with existing technologies. Yet these high-speed networks are now connecting schools with all schools to be connected by 2015.

The RBI, a joint venture of Chorus and Vodafone, see Chorus, the largest provider of fixed-line access and telecommunications infrastructure, installing and upgrading fibre to roadside cabinets and other infrastructure equipment, with retail service providers connecting the end users.

Vodafone is providing upgrades and additional cell towers, providing a wireless broadband service to rural communities using the mobile networks. In late 2012 Vodafone New Zealand got the official go ahead with the purchase of TelstraClear. With that sale go the company assets – including customers, network infrastructure and some mobile spectrum.

Vodafone NZ has now for many years positioned itself as the country’s largest mobile network operator, the purchase of TelstraClear will now also allow the company to really compete across the telecoms sector and further build its base that provides fixed line services, mobile voice, data and value-added mobile services. The company has had more than 50% of the mobile market since 2003, but since 2010, market share has continued to slip and by early 2013 is around 44% with most of its lost customer base moving to mobile operator 2degrees.

In the regulatory market, recent changes sees a new pricing model for wholesale services that was mandated in late 2012 with some prices reduced immediately while others are to take effect in 2014. The changes will have a long-term effect on UFB uptake as Chorus and other local fibre companies (LFC) continues their fibre rollout under the UFB.

Changes in the regulatory market will also affect the smaller players as Telecom and Vodafone now position themselves in a duopolistic market. The 2nd tier companies can still expand their business using unbundled local loop products such as VDSL as a route to the eventual fibre-to-the-premise (FttP) that will see 75% of New Zealanders covered by end-2019.

Telecom New Zealand has now closed its CDMA network, thereby allowing the company to move forward towards Long-term evolution (LTE), as many other operators worldwide are now moving too. The company commenced 4G/LTE trials in late 2012 continuing into early 2013. Whether this will be the golden opportunity to turn the company around and claim back its market leadership will be seen further into 2013-2014 after the rules of the digital dividend frequency auctions become clearer.

In the digital environment, the UFB and RBI developments will drive speeds across the country that will enable growth across all the market and environmental sectors of the New Zealand economy. The government has committed to providing access to an online network for e-learning in 2013 for students and schools that will see the coming generations of students with the necessary skills for the digital world of the future.

Mobile broadband subscriber numbers continue to increase, although slower than in past years as penetration increases. Growth of around 11% was achieved in 2012 and into 2013 will grow again, yet will be under a 10% increase. These year-on-year increases in mobile broadband numbers continue to exceed growth in fixed-wireless broadband. But the lack of ubiquitous mobile broadband coverage, its high cost on a short-term basis and overall signal strength sees the use of fixed-wireless broadband as a necessity across the country.

In 2012 we saw mobile network operator 2degrees growing on average at around one thousand customers a day since its launch. By late 2012 we are estimating that 2degrees has around 20% overall market share since its launch just over three years ago.

The mobile market continues to hover around 120-125% penetration is continuing to grow as some operators provide add-on packs attracting increased usage at a lower cost. With spectrum auctions planned that will allow the adding of LTE networks, further regional deployment of 3G coverage under the RBI, we will see more consumers in coverage and the possibility of even more subscribers across the networks.

Market highlights:

• Digital TV changeover commences as analogue TV starts its shutdown;
• Mobile subscribers numbers continues to increase as penetration increases to 124% by late 2012;
• Overall prepaid mobile subscribers increased by 1% as the postpaid market grew by 6%;
• Pay TV market stagnates at 50% household penetration, but a new player enters the market;
• RBI initiatives see mobile coverage to some areas for the first time;
• 4G LTE trials commence in preparation for future spectrum auctions;
• The fibre market sees high initial growth above 45% but only a small amount of users are connecting;
• Vodafone secures the assets of TelstraClear as its mobile share continues to decrease.

New Zealand – key telecom parameters – 2011 - 2012

(Compiled by BuddeComm, estimates and various industry sources)

For those needing detailed overviews, statistics and forecasts, as well as objective analysis on all aspects of the New Zealand telecoms industry, this report provides essential reading and gives in-depth information on:

• An overall market overview with statistics and forecasts;
• Operating overview of the key players in the market including financial overviews;
• Fixed and wireless broadband;
• Broadcasting and Pay TV markets;
• The Ultra-fast broadband network and Rural Broad Initiative;
• Telecommunications infrastructure developments;
• Regulatory developments;
• Digital media and the digital economy;
• Fixed network voice and VoIP markets;
• Mobile communications and regulatory issues covering spectrum and pricing developments.

Data in this report is the latest available at the time of preparation and may not be for the current year.