Those in rural areas are getting less bang for their buck when it comes to broadband. Photo / 123rf
Rural New Zealanders are paying more for less, according to the Commerce Commission’s latest Annual Telecommunications Monitoring Report, released today.
“Kiwis in more rural areas are likely to have significantly lower-performing broadband services that are more expensive compared with urban areas,” the regulator says.
The report shows that copper and 4G wireless broadband services are on average slower and more expensive than they are in urban areas – with rural broadband also being more likely to come with data caps when the rest of the country has moved to unlimited data plans, Telecommunications Commissioner Tristan Gilbertson said.
Options for the 13 per pent of people who live outside of areas covered by the Ultrafast Broadband fibre rollout could improve soon through various Government initiatives (see below).
But in the meantime, the main trend has been people in rural areas taking matters into their own hands by signing up for Elon Musk’s Starlink broadband-via-satellite service, which delivers unlimited data broadband to almost anywhere in NZ - and which has rapidly gained more than 10,000 New Zealand customers, and more than 1 million worldwide.
“We’ve seen these cost and performance differences drive a real shift in rural consumer choice over the past year. Copper connections, the historic backbone of rural connectivity, have fallen below 50 per cent of all rural connections and the technology balance has shifted to wireless, with satellite being the fastest growing technology,” Gilbertson said.
The ComCom recently began recruiting Starlink customers for its quarterly broadband testing. Initial results found that Musk’s $150/month service offered peak hour speeds par with entry-level fibre service.
Today, Gilbertson continued to boost Musk’s service.
“Starlink has been a real game changer, delivering average download speeds of over100 Megabits per second and giving rural consumers more choice than they have had before. It is clearly tapping into strong latent demand for a high-speed service that is more comparable to the urban experience,” the Commissioner said.
But despite market changes, Gilbertson said that affordability is still an issue, with rural consumers paying more, and getting less, than their urban counterparts.
“If you’re in an urban area, you can get a high-performing Fibre 300 plan at a cost of between 1.1 - 1.7 per cent of the average household income. But if you’re in a rural area, that same level of spend will only get a basic copper connection, while a service that is closer to the urban experience, like Starlink, will cost around 2 - 3 per cent of the average household income.”
Consumer advocate Craig Young, who heads the Technology Users Association of NZ (Tuanz) and has been campaigning for better rural broadband, told the Herald, “It’s good to have formal confirmation of something we’ve known for quite some time.”
Young welcomed the Commerce Commission to have a dedicated section on rural broadband in this year’s report, which followed the regulator’s May 31 release of terms of reference for its Rural Connectivity Study - a fact-finding exercise that could lead to a formal investigation, which in turn could lead to recommendations for regulatory changes (stakeholders who want to weigh in on the terms of reference, including rural households, can email market.regulation@comcom.govt.nz).
The Tuanz boss was positive about the rise of Starlink, too, if not as quite caught up in the hype as some.
“Satellite brings new competition but the cost can beyond the reach of many users,” Young told the Herald.
A Starlink installation kit, including a satellite dish, ordinarily costs $2000, with ongoing charges of $150 per month. A larger, higher-gain Starlink Business dish cost $4200, with monthly plans running from $426 to $2507.
The satellite broadband operator is currently offering a $199 special for its household install kit - but that deal has drawn fire from Wispa - a coalition of small rural and provincial ISPs who have raised the possibility it constitutes predatory pricing.
Starlink adoption is set to grow.
Spark, One and 2degrees have all recently signed on to be Starlink Business resellers (One, from late next year, will also use Starlink’s pending satellite-to-mobile service for 100 per cent NZ coverage for texting, with voice and data options to follow. Spark and 2degrees have trials with putative Starlink rival Lynk).
And the Government’s new Remote Users Scheme will provide grants of up to $2000 to fund the installation of a broadband service - which could be Starlink - at a remote rural property. Applications (here) close this month. There is $15m in the kitty, or enough to connect around 7500 homes.
Spark, One and 2degrees also recently confirmed they will each spend $24m - beyond their existing budgets - to extend 5G further into provincial and rural areas to boost voice and wireless broadband services. The funds were committed as a quid pro quo for being directly allocated 5G spectrum.
For its part, Chorus has been lobbying the Government to extend UFB fibre into rural areas.
Last year, the UFB network operator commissioned economic analysis showing that delivering high-capacity connectivity to the last 13 per cent of New Zealand without fibre was worth $16.5 billion to NZ’s economy over the next decade.
MBIE’s Lifting Connectivity in Aotearoa New Zealand strategy document, released in December, leaned in the same direction.
“The government will support or encourage the extension of fibre, including backhaul, to improve network performance and resilience in areas where the commercial viability of fibre backhaul to support various access modes is the best long-term solution but is not commercially viable for the private sector to provide on its own,” MBIE said.
Chorus chief executive JB Rousselot today told the Herald that the ComCom’s latest Annual Monitoring report further bolsters the argument for more fibre.
“As the report rightly points out, the cost and quality of broadband services vary considerably across the country. At Chorus, we recognise the urgency of addressing this disparity, and we are committed to contributing to the solution by pushing fibre further,” Rousselot said.
“With the right policy and regulatory settings, we think Chorus could invest up to $500 million in building fibre to an additional 75,000 premises – reaching over 150,000 New Zealanders and providing over 90 per cent of the population access to fibre [from 87 per cent today], the Chorus CEO said.
If the Government also chipped in, Chorus could take fibre coverage to 95 per cent.
A spokeswoman for Spark said, “While our networks reach 98 per cent of New Zealanders [by population], there are significant challenges in providing coverage across mountainous, foliage-dense terrain with highly dispersed rural populations and in many cases it’s not commercially viable to provide connectivity without Government support.
The direct allocation of 5G spectrum in return for extra coverage deal would also help expand coverage.
“We have also committed to expanding 5G connectivity to all towns with a population of more than 1500 people by the end of June 2026,” the spokeswoman said.
“We’re also excited to see where satellite is heading and have announced two new satellite options for our customers, with a satellite-to-mobile trial to extend coverage for mobile customers set to launch at the end of the year, and a business satellite broadband service which is already in trials with some customers.
“Although the technology is still evolving, we believe satellite has an important part to play in connecting Aotearoa New Zealand, and once there are more satellites launched and the service is available more broadly, it will allow our customers to start to use their services in more areas that aren’t reached by traditional mobile coverage.”
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is technology editor and a senior business writer.
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