Telco industry economics 'out of whack', Vodafone NZ boss says

Vodafone NZ chief executive Jason Paris says industry economics are out of "whack" and that a reset of customer exepectations is needed. Photo / Michael Craig.

By Nicholas Pointon of RNZ

Consumers will have to pay more for their internet and phone connections, otherwise the telecommunications industry will struggle to invest in new technology, according to a new report.

Price rises are already on the way for most from October 1, as wholesaler Chorus lifts the price on the most popular UFB fibre plan.

The New Zealand Telecommunications Forum report says New Zealanders are benefitting from a significant fall in the cost of telecommunications services, and average prices are lower than ever.

The report points to Consumer Price Index data, which shows telco prices have fallen dramatically over the past decade while other utilities costs, such as gas, electricity and council rates have increased.

Demand for data has steadily grown over the past 10 years. The report said in 2018/19 the average fixed broadband connection used 208GB per month. Five years earlier the average connection used just 32GB a month.

The forum's chief executive, Geoff Thorn, said although low prices have been great for consumers, industry economics are challenging its ability to keep investing at the rates required to meet ongoing demand and ensure New Zealander's benefit from the best technology the world had to offer.

Vodafone chief executive Jason Paris told a forum-hosted webinar the industry built a lot of goodwill during the Covid-19 lockdown and consumers need to realise the true value of the products they are benefitting from.

"I think as an industry we need to do a better job of taking this Covid opportunity and the fact they we've been able to re-set as an essential service to demonstrate that we should be able to get more value for the service we provide.

"There will be a customer who walks in to a Vodafone shop today and happily buys a $2000 iPhone and then complains about $20 to connect to [the mobile network]."

Paris said the economics is out of "whack".

"The value equation is out of whack and its an industry issue and its also a resetting of customers expectations in terms of the quality of the products and connectivity that New Zealander's get and their needs to be a return on investment from that, for us, to be able to invest in these new technologies."

Chorus chief executive JB Rousselot said the services New Zealanders were provided with were amongst the best in the world.

"When you look at that pricing graph people are getting a lot more value for a price that is not growing exponentially."

2 Degrees chief of corporate affairs Mathew Bolland said telcos were adding exponential value to businesses.

"I don't know how many thousands of small businesses and trades people are going around New Zealand and the service that keeps there business running and growing they're spending $40 a month on."

- RNZ