New Zealand is doing well by world standards for the speed and price of our broadband, according to a new report.
The Commerce Commission's Annual Telecommunications Monitoring Report 2020, released this morning, also confirms internet and mobile use both jumped during the lockdowns and beyond, as large parts of the workforce embraced working from home (see graphic below).
Our average cost for a mobile phone plan with at least two gigabytes of data is cheaper than the OECD (rich country) average, if still markedly above Australia (see graphic below), the Commission said.
In fixed broadband, the opposite is true. For a 100-megabit per second line with unlimited data (the most common type of plan in NZ) we are easily cheaper than Australia but just above the OECD average.
The Telecommunications Carriers Forum - an industry group representing the major telcos - was quick to seize on the fact that the report showed Kiwis were using more services than ever, at competitive prices, over a year in which total retail telecommunications revenue had fallen by four per cent.
It also confirmed that lucrative global roaming revenue dried up once the pandemic hit - a factor Spark had already flagged as a key factor in its recent profit fall.
Source / Strategic Analytics, Commerce Commission
"The Commerce Commission report shows the industry has invested $15.7 billion over the past decade, and New Zealanders are relying on telecommunications services more than ever," TCF head Geoff Thorn said as the regulator's latest monitoring reported landed.
Fixed broadband, with no voice line. Source / Strategic Analytics, Commerce Commission
"Yet in that same decade, industry revenue has remained essentially flat, at around $5 billion per year.
Fixed-line broadband connections by technology. Copper line service will begin to be withdrawn from August this year - at least in areas with UFB fibre available. Source / Commerce Commission
As an industry, we face an ongoing challenge to achieve the necessary financial returns to invest in even better networks and services for the future."
The subtext? It's time the ComCom got off our backs.
Average broadband download speed. Source / Cable.co.uk, Commerce Commission
But last week, the regulator leaned even more heavily on the sector, releasing an open letter to Spark, Vodafone and 2degrees that said they need to be more transparent about pricing - some people are paying up to $48 per month too much for their mobile phone by dint of being on a plan that offers more features than they actually use.
Average fixed-line broadband data consumption per month. Source / Commerce Commission
The three firms have agreed to introduce a new system by the end of this year that will see them send an annual usage summary to customers - plus a prompt, if necessary, to switch to a more cost-effective plan.
'Country of two halves'
Whether you're you're getting good bang for your buck depends in part where you live, technology commentator Paul Brislen says.
"New Zealand is now a tale of two halves - in the cities and main centres we largely have telecommunications pricing under control and it's mostly a commodity service. We no longer have to think too much about it and just get on with using it.
"But for rural New Zealand we have a different situation and one that needs addressing sooner rather than later. Slower speeds, higher prices and lower data caps are a major impediment to our rural communities' success."
Average mobile data consumption per month. Source / Commerce Commission
The ComCom's latest report also confirms that fixed-wireless - or wireless broadband, where fast internet is delivered to a fixed space such as a home or business over a mobile network - is now a substantial part of the market.
Telecommunications expenditure as a proportion of total expenditure. Source / Statistics NZ
Some 221,000 people now use the technology as a landline substitute - a 16 per cent increase over last year. Most are with Spark or Vodafone, which both have ambitious targets to move more customers to fixed-wireless - especially as they expand their 5G networks, which make the technology more competitive with UFB fibre.
The ComCom's report also includes the nugget that as of June 30, 2020, New Zealand ranked third highest out of the OECD countries for fixed-wireless broadband connections, with 4.5 subscriptions per 100 of population.
That's despite the billions that Crown and Chorus have shovelled into the world-class UFB (Ultrafast Broadband) fibre rollout, which is nearing its conclusion.
The report does point out that fixed-wireless broadband speeds dropped up to 25 per cent during the crush of the first lockdown, strengthening Chorus's view that fibre is much less susceptible to peak-time variations. Spark and Vodafone are both looking to their 5G upgrades for extra wireless broadband capacity.
Citing benchmarks carried out by one of its contractors, the Commerce Commission said fixed-wireless broadband speed dropped up to 25% during the first lockdown.
Chorus recently jacked up cash bounties for retail ISPs who could tempt fixed-wireless customers back to UFB fibre. Expect the commercial and regulatory war to intensify in the months ahead.
The ComCom's report also recorded a 12 per cent drop in home phone lines. More than half of households are now mobile-only when it comes to voice calls.
It also revealed that while uncapped data plans have long been the most popular in fixed broadband, the trend is now crossing over to mobile.
In the year to September 30, 2020, 14 per cent of residential on-account mobile customers and eight per cent of business customers had unlimited data, or "endless" data plans. But the watchdog also noted that "endless" data speed is throttled if you go over a monthly limit. So in the regulator's opinion, "it is not truly endless".
Mobile and broadband market share was steady among the major players in 2020 (see graphs below). A possible shake-up lies ahead, with Sky soon to launch a broadband service in partnership with Vocus and Elon Musk's Starlink soon to offer Kiwis unlimited data from the sky.
Minor movements in fixed broadband saw 2degrees overtake Trustpower to become the fourth largest provider, with a seven per cent share.
Spark's market share, which includes its sub-brand Skinny, marginally decreased from 41 per cent in 2019 to 40 per cent in 2020.
Vodafone's market share also dropped, from 24 per cent in 2019 to 21per cent in 2020 while Vocus remained steady at 13 per cent.
In mobile, Spark was steady on 40 per cent, Vodafone rose three per cent to 40 per cent, and 2degrees fell from 22 per cent to 19 per cent (2degrees has disputed the ComCom's figure, telling the Herald it did not lose market share).
Mobile market share, by connections. Source / Commerce Commission
And although still tiny, the MVNO (mobile virtual network operator) segment grew from less than one per cent to 1.4 per cent, with 85,000 customers on a Kogan Mobile plan (which runs on top of Vodafone's network in a wholesale deal) or through Trustpower - which although 50 per cent-owned by Vodafone NZ co-owner Infratil, resells mobile plans wholesaled from Spark. As ever, the telco industry remains a complex beast.
