Telecom's share of broadband cake drops

Telecom lost more of the retail broadband market in 2008 and now has 57 per cent, compared with 61 per cent at the end of 2007.

The figure comes in the Commerce Commission's telecommunications monitoring report for the year.

Meanwhile, the broadband market overall continued to grow strongly.

In June, New Zealand ranked 19th out of 30 OECD countries in terms of numbers of broadband connections, with about 20 broadband subscribers per 100 of population.

Total broadband connections, including fixed and wireless connections, had reached 915,000 by December 31.

The quality of broadband services also improved, with major internet service providers investing in extra network capacity. Nearly 60 per cent of digital subscriber line (DSL) connections had now been upgraded to the newer and faster ADSL2+.

In the mobile market, the competitive environment remained relatively unchanged from the previous year, the commission said.

Mobile phone use continued to increase and mobile calling minutes rose by 16 per cent for the 2007/08 financial year.

But New Zealand's mobile calling volumes as a percentage of total calling volumes still remained low by international standards, the report said.

Mobile calls make up only a quarter of total calling minutes, compared with at least a third to half in comparable countries.

The growth in mobile use was probably driven by restricted on-net calling offers, such as Vodafone's BestMates plan, given that mobile revenues and list prices had remained largely unchanged, the report said.

The entry of a third mobile operator, NZ Communications, into the market and Telecom's launch of its new 3G network later this year were likely to drive further competition in the mobile market.

However a number of factors could limit the impact of these developments, including the level of mobile termination rates - which are currently the subject of a separate investigation by the commission.

In the fixed-line market, average calling prices fell further in 2008, although list prices did not show much movement.

New Zealand residential plans continued to rank relatively poorly in OECD benchmarking, with high line rental and high fixed-to-mobile calling charges largely responsible, the commission said.

Better deals for consumers had largely shown up as new bundled offers, incorporating calling, line rental and broadband.

These offers were most competitively priced in Auckland, where exchanges had been unbundled, and in Wellington and Christchurch, where TelstraClear had its own infrastructure.

The number of consumers getting their telecommunications services over unbundled lines grew strongly in the second half of 2008, and 25,000 lines had been unbundled by year's end.

TELCO TALK
* Telecom's share of the retail broadband market has slipped to 57 per cent, down from 61 per cent in 2007.
* There are now 915,000 broadband connections nationwide.
* Mobile phone use has grown but calling volumes are still low by international standards.
* 25,000 phone lines have now been unbundled.