New Zealand's mobile phone sector is performing well on an international basis, with competitive pricing and good mobile coverage, according to a report released this morning by the New Zealand Institute of Economic Research.

The report, which commissioned by the telco Spark, found that 97 per cent of populated areas in New Zealand had 3G coverage, with a similar number expected to have 4G when the roll out is complete.

It also found that prices had been declining steadily, with consumers enjoying more competitive pricing plans and value packages. Spark chief executive Simon Moutter said the report went against some of the commonly held beliefs about mobile in New Zealand.

"This report dispels the commonly held myth that New Zealand has high mobile prices and poor network coverage," Moutter said.

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"Despite the challenges of a small population spread widely over mountainous islands, we're actually very well served by mobile technology. Prices stack up well against many comparable countries and we have coverage in less populated areas that simply wouldn't exist in many other places."

Over the last four years, mobile data use has also increased rapidly, with growth of more than 600 per cent, and data use expected to grow by 50 per cent each year in the coming period.

Although the report is positive about the growth of mobile and data use and the mobile coverage in New Zealand, it also highlights a number of issues the industry is facing.

New Zealand's low population density and varied terrain means having a high network coverage overall costs significantly more than many other countries.

Constrained revenues with increasing demand for mobile data, and cheaper pricing, as well as the capital investment required to keep up with the technology changes are meaning companies are having to make tough decisions that are expected to result in trade-offs in the future. Moutter said the report showed a number of areas where industry discussion was needed.

"We've been concerned for some time that the apparent mismatch between expectations of the mobile networks and the unsustainable economic realities that underpin them," Moutter said. "This report sheds light on that big challenge for New Zealand network operators," he said.

"We need a quality debate on the future direction of our mobile networks because the importance of mobile data connectivity to our country's future economic success means it's vital we get this right."

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Read the NZIER research for Spark here: