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2009 New Zealand - Telecoms Overview & Analysis

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, statistics and forecast.
  • Key players in the market.
  • Telecommunications infrastructure.
  • Regulatory developments.
Reseracher:- Phil Harpur

Current publication date:- December 2008 (12th Edition)

Next publication date:- December 2009


BuddeComm’s 2009 New Zealand - Telecoms - Overview and Analysis publication provides a detailed overview, including statistics, forecasts and analysis, of the regulatory, infrastructure, fixed network voice and VoIP sectors of the New Zealand telecommunications market, as well as an overview of the key market players and global trends.

Market statistics and forecasts
The total telecoms market in New Zealand grew by 2% to $7.1 billion in the 12 months to June 2008. BuddeComm predicts that the total New Zealand telco market will grow around 2.3% in 2008/09 and 3.5% in 2009/10, although these growth rates could be up to 1% lower, depending on the severity of the global financial crisis.

Fixed-line voice market (voice calls and local access) revenues continue to decline and has been losing overall share of telecom services market for several years. Overall the fixed network voice market declined by 4% in 2007/08 to $2.53 billion and we predict that it will decline a further 5% in 2008/09 and 6% in 2009/10, as phone call prices and volumes continue to drop and more people give up their traditional home phone line. Long-distance calling prices in particular continue to fall.

Data and broadband continues to be a strong market driver although broadband revenues dropped significantly on what was anticipated due to weaker than expected results from Telecom. Pay TV revenues were weaker in the 2008 financial year than previous years due to a soft local economy. Revenue growth rates in this sector are predicted to pick up again in 2008/09 and reach a growth rate of 8% in 2009/10.

Annual change of total market revenue by service in New Zealand - 2007 - 2010
Revenue category 2007 2008 2009 (e) 2010 (e)
Annual change
Fixed voice & local access -2.0% -4.0% -5.0% -6.0%
Data and broadband 7.8% 7.0% 8.2% 8.1%
Mobile 0.4% 4.6% 5.4% 6.3%
Pay TV 12.6% 6.6% 9.0% 10.0%
Total telco market 0.5% 2.0% 2.3% 3.5%
(Source: BuddeComm based on industry data)

Opportunities in the second tier market
Even Telecom New Zealand has itself admitted that functional separation has already begun to stimulate competition in New Zealand. Existing participants now have the opportunity to extend their activities, and additional competitors now have more opportunity to enter the market which has previously been dominated far too much by Telecom. Smaller competitors now have more attractive wholesale arrangements coming into place and this will put further pressure on prices, which have historically been far too high due to Telecom’s overwhelming market dominance.

But market consolidation will continue
Despite these opportunities, there is no doubt that a weakened economy due to the financial crisis will lead to further consolidation in the telecom sector, especially among the smaller fixed-line telcos/ISPs. Also, TelstraClear, the country’s number two fixed-line operator, has been unable to gain any market traction, despite the opportunities that are opening up due to functional separation. It is quite likely that its owner across the Tasman, Telstra, will show increasingly less interest in the telco in a worsening financial crisis, as any potential investment funds earmarked for New Zealand, are diverted back to home soil.

Key highlights:

Impact of financial crisis

  • As in Australia and other developed markets, the financial crisis will most likely led to a drop in consumer demand and this will put pressure on telco service prices during 2009.
  • New Zealand’s telco sector will actually be better placed than that of Australia. Despite a potentially weaker economy as a result of the financial crisis, it has already put in place the framework for the rollout of its national telco infrastructure, which will hopefully begin to give second tier telcos a more level playing field.
Market competition
  • Competition will continue to grow in 2009 in the New Zealand market, although from a very low base due to the enormous market power that Telecom has had up to functional separation in 2007.
  • It has been a long process for Vodafone to integrate fixed-line telco operator ihug, after an acquisition back in 2006, but finally Vodafone seems to be gaining traction in the fixed-line market with DSLAM wholesale agreements in place by late 2008.
  • Vodafone will push hard in 2009 to further its rollout and will start to gain significant market share from Telecom in both the fixed-line calling and broadband market.
  • Other players like Orcon will also continue with DSLAM rollouts and make good progress, and this will stimulate healthy ADSL2+ competition.
Phil Harpur
November 2008

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

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, statistics and forecast.
  • Key players in the market.
  • Telecommunications infrastructure.
  • Regulatory developments.
  • Fixed network voice and VoIP markets.

1.1 Market overview and analyses
1.1.1 Market outlook for
1.1.2 Questions surround National NZ’s new ambitious broadband policy
1.2 Revenue statistics and forecasts
1.2.1 Revenue statistics by market segment
1.2.2 Revenue statistics by major provider
1.2.3 Broadband and data market
1.2.4 Mobile market
1.2.5 Fixed voice and VoIP market
1.3 Digital media
1.4 Infrastructure - NGN and FttH
1.5 Broadcasting
1.6 Market forecasts to 2018
1.7 Crisis and recession is hitting New Zealand hard
1.8 Infrastructure to stimulate the economy
1.8.1 Fibre lifeline from the new government
1.8.2 Don’t roll out fibre without a plan for services
1.8.3 Whole-of-government approach is essential
1.9 Mixed blessings from functional separation
1.9.1 More aggressive Telecom
1.9.2 No wholehearted wholesale
1.9.3 No mobile wholesale
1.9.4 Still no certainty regarding fibre wholesale
1.9.5 Broadband problems moving from penetration to speed
1.10 Mobile
1.10.1 2009, the year of mobile competition
1.10.2 Hello to TelstraClear - good to see you again
1.10.3 Unique telecoms situation in New Zealand
1.11 Expect disruptive wireless broadband
1.12 Conclusions
3.1 Telecom Corporation of New Zealand
3.2 Telstraclear
3.3 Vodafone New Zealand Ltd
3.4 Kordia
3.4.1 Overview Kordia acquires ISP Orcon
3.4.2 The Kordia network DMR and fibre optic network IP core IP network upgrade Broadband access Kordia spectrum
3.4.3 Wireless broadband Launch of Extend wireless broadband service Kordia to enter municipal WiFi market
3.4.4 International cable link
3.4.5 Digital Audio Broadcasting (DAB) Overview Digital radio trials
3.4.6 Video-over-IP broadcasting
3.4.7 Overseas developments
3.4.8 Financial results -
3.5 CallPlus
3.5.1 Overview
3.5.2 Access strategy
3.5.3 WiMAX trials
3.5.4 Company background
3.6 M2 Telecommunications
3.6.1 M2 Telecommunications Group Overview M2 Wholesale Other acquisitions
3.7 Southern Cross Cable Network
3.7.1 Network overview
3.8 WorldxChange Communications
3.8.1 Overview
3.8.2 Network
4.1 Where is the NZ VoIP market heading?
4.1.1 Residential VoIP adoption will be slow and protracted
4.2 Local VoIP market developments
4.2.1 Market sizing and estimates
4.2.2 Residential sector Market overview Slingshot (CallPlus) 2Talk Ltd Skype
4.2.3 Business sector
4.3 Local access and fixed voice market overview
4.3.1 Market trends moving towards
4.3.2 Smaller players gaining only limited traction
4.4 Fixed-Mobile Convergence (FMC)
4.4.1 Service bundling
4.4.2 Dual-mode services
4.4.3 Network convergence
5.1 Telecommunications infrastructure in New Zealand
5.1.1 Market overview
5.1.2 Market analysis Savings can pay for infrastructure Fibre networks and NGNs
5.2 Network access technologies
5.2.1 Copper cables Local Loop Unbundling (LLU)
5.3 VDSL2
5.3.1 Fibre networks
5.3.2 Local metropolitan fibre network initiatives Velocity Networks - Hamilton City network Inspired Networks - Palmerston CBD network FX Networks Vector Communications Network Tasman Christchurch City Networks CityLink Kaiuma Park Estate lays FttH Smartlinx
5.3.3 Wireless Gigabit wireless network
5.4 Regional fibre network initiatives
5.4.1 Northland Regional Council and Kordia
5.5 Local council initiatives
5.5.1 Auckland City Council - broadband strategy
5.5.2 Proposed fibre rollout in Wellington
5.6 Statistics on fibre-enabled communities
5.7 Internet peering
5.7.1 What is Internet peering?
5.7.2 Disadvantages in not peering
5.7.3 Internet Peering Exchanges
5.7.4 Dark fibre
5.8 International network developments
5.8.1 Government considers Trans Tasman link
5.8.2 Cable to New Zealand with Kordia - PPC-
5.8.3 Kiwi Advanced Research and Education Network (KAREN) Overview Network development Government grant for increased bandwidth
5.9 Telecom’s Next generation network
5.9.1 Introduction
5.9.2 The original NGN plan
5.9.3 Fibre-to-the Node Network and cabinetisation plan
5.9.4 Network rollout milestones to
5.9.5 Greenfield FttN program Manukau City Telecom Wholesale and WorldxChange pilot broadband over fibre service
5.9.6 Telecom partners with Alcatel-Lucent for IP network
5.9.7 Capital expenditure on new systems
5.10 Telstraclear’s network
5.10.1 Network overview
6.1 Local Loop Unbundling and TSO
6.1.1 Local Loop Unbundling (LLU) and Unbundled Bitstream Service (UBS) overview LLU versus UBS Unbundled Bitstream Access (UBA) Wholesale bitstream services
6.1.2 LLU and UBS market developments Market developments - The Availability and Conditions of Regulated Services Unbundled Copper Local Loop Unbundled Bitstream Access (UBA) EUBA launch and uptake Local loop and bitstream backhaul services Sub-loop related services (cabinetisation) Telecom required to submit terms and conditions for unbundling InternetNZ gives ULL and cabinetisation recommendations Government reforms - First phase report on LLU released Telecom forced to supply ULL, bitstream terms New Zealand moved closer to Naked DSL - July Telecom reveals plans for LLU and co-location rollouts De-averaged pricing recommended for NZ LLU NZ also favours de-averaged pricing model for UBA Final UBA pricing scheme
6.1.3 Interconnection Market developments - Interconnection dispute between Vodafone and NZ Communications
6.1.4 Telecommunications Service Obligations (Kiwi Share) Background Market developments - Adjustments to TSO for 2004/05 and 2005/06 financial years TSO review Dispute Resolution Scheme Adjustment of Telecom’s TSO charge for Market developments - Government review of TSO Implications of government reviews TSO costing released by Commerce Commission
6.2 Mobile, wholesale and number portability
6.2.1 Mobile services reforms - Mobile co-location services Reversal of mobile roaming decision
6.2.2 Mobile services reforms - Commerce Commission puts more pressure on mobile duopoly New entrants required to provide 80% coverage Vodafone threatens to scale back its 3G rollout Question of access for new mobile entrants to new applications Commerce Commission issues draft mobile services recommendations Government’s final recommendation on co-location
6.2.3 Wholesale access Operational separation Government formerly declares operational separation plan An overview of structural versus operational separation Telecom wholesale enters the market
6.2.4 Number Portability (NP)
6.3 Telecommunications Act
6.3.1 Framework of the Telecommunications Act
6.3.2 The Commerce Commission
6.3.3 Standards New Zealand and the Telecommunications Carriers Forum
6.3.4 Government reforms on operational separation of Telecom - 2007 - Introduction Accounting requirements under operational separation Government releases details of operational separation of Telecom Overview Access Network Services division Wholesale unit Independent Oversight Group (IOG) Government formerly announces operational separation split plan Telecom’s reaction to the government’s operational separation announcement Telecom lodges amended separation plan Government amends Operation Separation determination for Telecom Wholesale Government rejects Telecom’s separation plan
7.1 Telecom New Zealand
7.1.1 Company information Company overview Product and services overview
7.1.2 Market developments and strategy overview Five year strategic plan
7.1.3 Company divisions Retail Wholesale Chorus International Technology & Shared Services AAPT Gen-i Contract with Commonwealth Bank of Australia (CBA) and ANZ Analysis
7.1.4 Marketing channels
7.1.5 Mobile services
7.1.6 Telecom’s network Network overview and statistics PSTN NGN Transformation contract to assist Telecom Retail Data/ISDN network Broadband and IP networks Mobile network IP/MPLS AAPT International fibre optic cables International data network Satellite services
7.1.7 Subsidiary and associate companies TCNZ Pacific Investments Ltd
7.1.8 Outsourcing agreements Alcatel-Lucent NGN agreement
7.1.9 Products and services Retail Wholesale Products and services overview Wholesale UBA services Regulated services via Chorus Data services Mobile services Gen-i Online and digital media Payphones
7.1.10 Environmental issue developments Telecom to build environmentally sustainable offices
7.1.11 Brief company history
7.1.12 Financial year - 2007 - Full year ending June Telecom Group results NZ Business NZ Consumer NZ Technology and Enterprises Australian operations Local service and calling revenue Interconnection revenue Mobile Data revenue Broadband and Internet IT services Wholesale revenue Capital expenditure Market forecasts Half year ending December Telecom Group results
7.2 TelstraClear
7.2.1 Company information Financial results - Full year to June
7.2.2 Operating statistics
7.2.3 The network Network overview Fibre network overview Wireless network Network applications NGN platform solution rollout Network expansion and upgrades 2005 developments Wellington and Auckland network capacity upgrade High speed Internet platform upgrade Plan to wholesale triple play cable network Whangarei is connected to NGN South Island network expansion Pegasus Town goes live TelstraClear and the KAREN Telecom’s wholesale fibre network service Partnership with utility group North Island partner
7.2.4 Products and services Overview Voice services VoIP Mobile Internet and broadband Pay TV Wireless access Data and managed services IT services Paraparaumu contact centre Online content
7.2.5 Company history
7.3 Vodafone New Zealand
7.3.1 Company information Global and Oceania operations
7.3.2 Major acquisitions ihug
7.3.3 The network 2G network 3G WCDMA network HSDPA 3G network upgrade WCDMA 900MHz network upgrade extension Broadband LLU network Slingshot signed in wholesale LLU agreement
7.3.4 Reseller agreements
7.3.5 MVNO deals - M2, Compass and Orcon
7.3.6 Roaming deals NZ Telecommunications roaming deal
7.3.7 Financial results
7.3.8 Subscriber and operating statistics Current Pricing and usage statistics
7.3.9 Products and services Retail Triple play service At Home service - domestic calls over mobile network Fixed line broadband ULL service in Auckland Vodafone MusicStation Business VDSL plans
7.3.10 Company analyses Wholesale strategy - MVNO and LLUs Vodafone product strategy analysis
7.3.11 Company history
Table number:
Table 1 - Total market revenue by major service - 2006 - 2010
Table 2 - Annual change in total market revenue by service - 2007 - 2010
Table 3 - Telco market revenue by major provider - 2006 - 2010
Table 4 - Annual change in telco market revenue by major provider - 2007 - 2010
Table 5 - Percentage breakdown of telco market revenue by major provider - 2006 - 2010
Table 6 - Data market revenue - broadband, dial-up and other data - 2004 - 2010
Table 7 - Data market revenue growth - broadband, dial-up and other data - 2005 - 2010
Table 8 - Mobile market revenues by operator - 1997 - 2010
Table 9 - Local access calling revenues & annual change - 2003 - 2010
Table 10 - Telecommunications services revenue by market - 2007 - 2008; 2013; 2018
Table 11 - Telecommunications services revenue % by market - 2007; 2008; 2013; 2018
Table 12 - Telecommunications services revenue by product - 2000; 2007 - 2008; 2013; 2018
Table 13 - Telecommunications services revenue % by product - 2000; 2007; 2008; 2013; 2018
Table 14 - Country statistics New Zealand - 2008
Table 15 - Telecom revenue statistics - 2008 - 2010
Table 16 - Telephone network statistics - 2008
Table 17 - Internet provider statistics - 2008
Table 18 - Broadband statistics - June 2008
Table 19 - Mobile statistics - June 2008
Table 20 - Broadcasting statistics (pay TV and FTA) - 2008
Table 21 - New Zealand market - local access, calling revenues and annual change - 2003 - 2010
Table 22 - Summary of FttH communities in New Zealand - 2008
Table 23 - New Zealand TSO annual cost - 2001 - 2006
Table 24 − Telecom Group operating highlights & annual change - 2007 - 2008
Table 25 - Telecom Group operating revenue by service & annual change - 2007 - 2008
Table 26 - Telecom Group operating revenue by industry segment & annual change - 2007 - 2008
Table 27 - Telecom Group operating earnings/(loss) by industry segment & annual change - 2007 - 2008
Table 28 - Telecom local service revenue & annual change: business, residential, smartphone - 2007 - 2008
Table 29 - Telecom Group voice (calling) revenue & annual change - 2007 - 2008
Table 30 - Telecom Group interconnection revenue & annual change - 2007 - 2008
Table 31 - Telecom Group mobile revenue & annual change - 2007 - 2008
Table 32 - Telecom Group data services revenue & annual change - 2007 - 2008
Table 33 - Telecom Group broadband & Internet revenue & annual change - 2007 - 2008
Table 34 - Telecom Group capital expenditure & annual change - 2007 - 2008
Table 35 − Telecom Group capital expenditure - 1998 - 2008
Table 36 - Telecom total revenue - NZ operations - 2006 - 2010
Table 37 − Telecom Group financial results and annual change - 2006 - 2007
Table 38 - TelstraClear financial data and annual change - 2007 - 2008
Table 39 - Vodafone 2G and 3G network cell sites
Table 40 - Vodafone revenue and annual change - 1996 - 2009
Table 41 - Vodafone annual profit and annual change - 2002 - 2006
Table 42 - Monthly ARPU - prepaid, postpaid and total - 2003 - 2008
Table 43 - Vodafone subscriber statistics & annual change - 1998 - 2010
Table 44 - Voice minute usage on network - 2005 - 2008
Exhibit number:
Exhibit 1 - Regulatory timeline - scheduled UBA and other services launch by service variant
Exhibit 2 - Understanding wholesale bitstream offers around the world
Exhibit 3 - Telecom Corporation New Zealand at a glance
Exhibit 4 − Subsidiary companies
Exhibit 5 − Associate companies
Exhibit 6 - TelstraClear Ltd at a glance
Exhibit 7 - Vodafone New Zealand Ltd at a glance
Exhibit 8 - Comparison of Vodafone’s 3G mobile networks

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