Telco investment has hit $1.7 bln a year, upbeat industry report says

Thursday 11th February 2016

Investment in the telecommunications sector is $1.7 billion a year, proportionately one of the highest levels in the OECD, according to a report released today on the status of the New Zealand sector.

The report by industry lobby group, the New Zealand Telecommunications Forum (TCF), said the sector is performing well above its international competitors in several ways, including the fastest fibre uptake in the developed world, with a 250 percent increase in total fibre connections in the year ended Sept. 2015, and one of the fastest 4G mobile download speeds globally.

A breakdown of annual sector investment shows $686 million went into fibre fixed access in 2014 compared to $665 million in 2013, while investment in the core network and backhaul, that connects the core to other sub-networks, rose to $694 million from $568 million in 2013. Mobile investment fell $29 million from 2013 to $233 million in 2014 and non-fibre fixed access also dropped by $11 million to $78 million over the same period.

TCF chief executive Geoff Thorn said the sector is providing services that are increasingly competitive on both price and quality compared to other countries. Prices for mobile services fell 46 per cent between 2012 and 2014, the second-largest price decline on average across the OECD, despite other household expenditure increasing.

The report comes the day after the Commerce Commission said consumers can be more confident about the fairness of standard contracts with telco companies after persuading them to change certain terms it thought were unfair. The terms related to limitation of liability, unilateral variation of services, contracting out of consequential loss, and responsibility for unauthorised charges

Most New Zealand companies have contracted to acquire telco services from one or more of the companies involved which the commission said had either amended their contracts or provided information showing the terms were necessary,

Thorn said there had been phenomenal change in the sector in the past few years with consumers now expecting fast, ubiquitous connectivity for their digitally-connected lives in the same way they expect running water and power.

Nearly half a million customers moved from capped to uncapped broadband connections in the year ending June 2015, from 8 percent to 33 percent, the report said, and New Zealand households now consume double the amount of data as they did a year ago.

The sector is doing a “stellar job” of dealing with increasing consumer demand while trying to meet the government’s ambitious broadband targets, Thorn said. The government’s targets are for ultrafast broadband to deliver faster, better internet to at least 99 percent of the population by 2025 while the rural broadband initiative aims to combine wireless towers, rural cabinets and fibre to enable more than 90 percent of users outside of UFB areas to have broadband internet at minimum peak speeds of 5 megabits per second and up to 50Mbps .

The Ministry for Business, Innovation and Employment is currently reviewing the telco legislation which looks set to align regulated prices for fibre and copper-based services, using a similar framework to the electricity sector.

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