Broadband uptake improving - slowly

Ernie Newman

New Zealand broadband uptake is improving but too slowly to improve its relative international standing of 22nd among OECD countries.

Broadband subscribers here grew 29 per cent to 475,700 in the six months ended March 31 but that was down from 7 per cent growth for the six months to the end of September 30, 2005, said Statistics New Zealand.

The country's low OECD ranking was one of the reasons that the Government announced in May it would break open Telecom's monopoly on its lines to achieve better and cheaper internet services - the so-called unbundling of the local loop.

Business and government subscribers increased 6 per cent by 13,800 for the six months to March 31, down from 17 per cent in the 2005 period.

Dial-up subscribers dropped by 6.6 per cent to 812,300.

About 79 per cent of internet service providers saw the strength of competition as the greatest barrier to the growth of operations.

Other common barriers were the stronger regulatory environment, the cost of international bandwidth and ISPs' access to financing. The number of ISPs dropped during the six months from 66 to 57, with larger operators increasing subscriber numbers at the expense of smaller ISPs.

Ernie Newman, chief executive of Telecommunications User Association of New Zealand, said it showed the Government was right to take the regulatory action that it had as the country still had much ground to make up.

"We are up against a moving target. Broadband is growing at a faster rate then PCs and mobile phones," said IDC telecommunications analyst Chris Loh. "The industry has moved into an understandably intense focus on the detail of execution around unbundling, naked DSL, and Telecom's shift to operational-wholesale separation."

The survey was a snapshot before all the frenetic industry developments of the past few months.

Telecom was driving a lot of change internally on its wholesale plans and consumers could expect to see substantial growth of broadband uptake in 2007 and 2008.

* This story originally incorrectly stated that broadband subscription had grown by 4 per cent to 1.3 million.