This report 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.Key issues covered include:Telecom New Zealand maintains a stranglehold on the local access market in fixed-line voice and broadband.
Total market growth of around 3.9% is predicted in 2007 and 3.6% in 2008, down from 4.1% in 2006.
The combined fixed network voice and local access market displayed negative growth for the first time in 2006.
This negative growth will gradually accelerate over the next few years.
Mobile growth will begin to taper off as the market approaches saturation.
Data and broadband will take over from mobile services as the key driver of overall market growth from 2007 to 2010.
It was not until mid 2006 that the government put legislation in place that will pave for the way for Local Loop Unbundling (LLU).
While upsized UBS went live in 2006, LLU and Naked DSL are still waiting for introduction, perhaps in late 2007 or possibly even as late as 2008.
Telecom New Zealand maintains a stranglehold on the local access market in fixed-line voice and broadband.
It has made steady progress during 2006 with strong growth in broadband and data services; however, it is still heavily reliant on revenue from declining traditional services.
Total market growth of around 3.9% is predicted in 2007 and 3.6% in 2008, down from 4.1% in 2006.
The combined fixed network voice and local access market displayed negative growth for the first time in 2006.
This negative growth will gradually accelerate over the next few years.
Mobile growth will, however, begin to taper off as the market approaches saturation.
It was not until mid-2006 that the government put legislation in place that will pave for the way for Local Loop Unbundling (LLU).
Both LLU and an upsized UBS service should, but will not necessarily, allow triple play services.
While upsized UBS went live in 2006, LLU and Naked DSL are still waiting for introduction, perhaps in late 2007 or possibly even as late as 2008.This report 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.
Market overviewThe total telecoms market in New Zealand grew by 4.1% from $7.75 billion in 2004/05 to $8.03 billion in 2005/06.
Total market growth of around 3.9% is predicted in 2007 and 3.6% in 2008.
Telecom maintains a stranglehold on the local access market in fixed-line voice and broadband.
The combined fixed network voice and local access market displayed negative growth for the first time with growth of -1.8%.
This negative growth will gradually accelerate over the next few years: -2.0% is predicted for 2007 and -3.0% for 2008.
Data and broadband will take over from mobile services as the key driver of overall market growth from 2007 to 2010.
Mobile service still grew very strongly in 2005/06, displaying 8.6% growth.
Mobile growth will, however, begin to taper off over the next few years as the market approaches saturation, with revenue growth of 6.1% predicted in 2007 and 5.0% in 2008.
Key players in the marketTelecom made steady progress during 2006 with strong growth in broadband and data services; however, it is still heavily reliant on revenue from declining traditional services.
Telecom is expected to launch high-speed ADSL2+ broadband services on its Next Generation Network (NGN) beginning in 2007.
TelstraClear expects to launch its first high-speed mobile broadband and voice service by mid-2007.
CallPlus has a strategy to roll out WiMAX nationally and has investment backing for the $250 million that will be needed from 2006 to 2010 to achieve this goal.
In late 2006 Vodafone New Zealand acquired 100% of local ISP ihug.
The partnership opens up exiting opportunities for the pair in the area of fixed-to-mobile convergence in 2007 and 2008.
Kordia, formerly known as THL Group which included BCL, is working with New Zealand broadcasters to deliver digital television in 2007.
Telecommunications infrastructureBy late 2006 New Zealand trailed behind most of the western world in the adoption of high-speed broadband access.
The government’s decision not to agree to go ahead with LLU until in mid-2006 has meant that ADSL2 and ADSL2+ adoption has been very slow.
It now appears that LLU is unlikely to be implemented before late 2007.
In August 2006 Telecom finally announced that its NGN was now expected to be completed over a two year period to 2008.
For the past few years the industry has seen a significant rise in the use of wireless technologies as serious competition to the more traditional copper and fibre optic-based solutions.
A number of niche fibre optic networks have also been established.
RegulatoryIn June 2006 the government introduced a new Telecommunications Amendment Bill to parliament, regarding new broadband access regulations.
The Bill enables the introduction of unbundling of the local loop and accounting separation for Telecom.
The Bill also amends the existing unbundled bitstream service and its supporting backhaul service to remove the existing constraints placed upon it.
Access seekers are now given assurance that they can purchase Naked DSL services without any requirement to purchase an analogue telephone service.
Although by 2006 there had been a regulatory UBS in place for some time, the speed was slow, especially on the uplink.
Both LLU and an upsized UBS service should, but will not necessarily, allow triple play services.
While upsized UBS went live in 2006, LLU and Naked DSL are still waiting for introduction perhaps in late 2007 or possibly even as late as 2008.
In December 2006 the Finance and Expenditure select committee made recommendations for amendments to the Telecommunications Amendment Bill that would see the operational separation of Telecom.
There is no doubt that the implications of the proposed new amendments to the Telecommunications Bill would have a major impact on the telecommunications market in 2007 and 2008.
Fixed network voice and VoIP marketsIn 2006 Telecom maintained its virtual monopoly over the local access market, with an untouchable market share of 80%, which has been relatively steady since 2003.
The fixed network voice market declined by 1.8% in 2006 and we predict that it will decline a further 2% in 2007.
A key driver for the decline in local call revenues during 2006 was a migration from dial-up Internet access to broadband.
Long-distance calling prices in particular continued to fall.
The market also continues to shrink at the expense of alternative access networks such as mobile and VoIP as well as products based on data and IP-based solutions.
ihug, acquired by Vodafone in 2006, is one of the smaller alternate providers that has potential to make some inroads in the market, although from a very small base.
While there has been significant adoption of VoIP and IP telephony amongst the business sector, especially amongst larger organisations, residential VoIP adoption in New Zealand is lagging most of the developed world.