ComCom: No regulation for NZ mobile – but 5G spectrum auctions need close attention

New Zealand’s Commerce Commission has given a thumbs up for the Kiwi mobile market  – and a thumbs down to any regulatory intervention – saying it’s a competitive market, serving customers well.

The Mobile Market Study final report says New Zealand’s mobile consumers are benefiting from an increasingly competitive market environment with market share among the three national players – Vodafone, Spark and 2degrees – has become more evenly balanced, with 2degrees taking more market share.

The report shows Vodafone and Spark still hold the lion’s share of the market, with 40.5 percent and 37.9 percent of subscribers, with 2degrees, which entered the market in 2009, now holding 20.5 percent of the market.

“We haven’t identified any particular problems or structural issues that could be hampering competition,” says Telecommunications Commissioner Stephen Gale of the report findings.

Unsurprisingly the findings were welcomed by Vodafone, Spark and 2degrees.

The study also shows an emerging market for ‘virtual’ operators selling mobile services without having to build their own mobile network.

The mobile virtual network operator (MVNO) holds just 1.1 percent market share, but has seen growth in recent months with companies including Vocus – which earlier this year slammed the preliminary Mobile Market report – Warehouse Mobile and Kogan entering the market. Trustpower also plans to enter the fray, bundling mobile offers with its existing broadband and energy services.

“Because of these developments, the Commission does not consider there is any need for regulation of wholesale access at this time,” the Commerce Commission says.

But Gale flagged the need for wholesale and retail competition matters to be at the forefront of decisions relating to the upcoming auction of radio spectrum for 5G services in order to ensure continued competition.

“With Spark, Vodafone and 2degrees each having a network of similar technology with similar geographic and population coverage metrics, looking forward we consider the allocation of spectrum to be particularly important for future competition,” Gale says.

The report, instigated back in 2017, comes as Vodafone and Spark jockey for 5G leadership. Vodafone has been testing 5G with plans to have a commercial service up and running in Auckland, Wellington, Christchurch and Queenstown in December.

Meanwhile Spark – which had its original 5G plans shot down by the New Zealand Government Communications Security Bureau over Huawei network security concerns – has launched a limited, invitation only, 5G service in Alexandra. The service uses Nokia technology.

When is unlimited not unlimited?

When it come to the services Kiwis are receiving from their mobile telco providers, the report notes that New Zealand’s 4G performance is ranked eighth out of 88 countries in an OpenSignal report, though the availability of 4G at 57th out of 87 countries.

It notes that mobile plans offering higher volumes of data are increasingly popular. To highlight that, it noted the total number of residential subscribers purchasing voice, SMS and data bundles with allowances of 3G or more was up from 133,000 in 2016 to 497,000 in 2018.

Spark, in its cross submission on the reports preliminary findings paper, noted a shift towards unlimited data plans, including ones that can be shared across several users, as a predominant trend in the retail market.

However, Teligen, which does telco benchmarking, much of which the ComCom report relies on, no longer considers New Zealand’s ‘unlimited’ data plans to qualify as unlimited, because of telco’s throttling the speed once a threshold has been reached.

The average volume of data used by mobile consumers was 2GB per month in 2018 – a figure the report says is growing strongly.

Prices for mobile services in New Zealand have been falling and compare well with other OECD countries, the report notes – though not all fare so well compared with Australia, with mobile prices per GB for the highest data plans offered in New Zealand coming in around NZ$80-$85, versus NZ$56 from Vodafone Australia and NZ$103 for Telstra.

“For the 2G and 5G  baskets, the New Zealand price reported by Teligen is currently at or below the OECD average.”

For larger baskets, however, mobile pricing in New Zealand is relatively high when compared to Australia, but below the OECD average.

One area the report does note a need for change is in the low number of consumers moving telco plans. Sixty-eight percent say they rarely, if ever, compare plans and 54 percent saying they haven’t switched providers in the past five years.

“By shopping around more frequently consumers are likely to trigger more competition between mobile providers,” Gale says.

“We are keen to see more consumer activity and will be looking into ways we can help New Zealanders understand whether they are getting the best deal possible and, if not, consider switching.”

However, in response, Vodafone NZ says its data shows a high number of Vodafone customers change the make-up of their mobile plans each year – if not their provider.

Vertiv steps up NZ electrics, utilities focus with Cuthbert Stewart partnership

Vertiv has appointed Cuthbert Stewart Limited (CSL) as a distributor of Vertiv Liebert Uninterruptible Power Supplies (UPS) for the New Zealand wholesale electrical, industrial and utilities sectors.

Vertiv said its UPS products are available now through CSL distribution channels in the New Zealand market, where a reliable power supply is critical. CSL will distribute Vertiv’s full range of single-phase UPS products including Liebert PSA5, an economical, environmentally-friendly line-interactive UPS that offers full-featured power protection for small office computers and electronic equipment, and the Liebert ITA2 rugged UPS which is moisture and dust resistant.

Based in Auckland, CSL acquired Energy Solution Providers earlier this year and together the companies now offer energy audits as well as technical electrical product solutions to help industrial companies and facilities minimise and protect their energy usage.

“While we have a strong presence in the information and communications technology (ICT) market in New Zealand, our partnership with CSL will drive expansion into the industrial and utilities markets,” said Robert Linsdell, managing director Australia and New Zealand, Vertiv. “We have already seen the value of energy audits in the corporate space and CSL’s ability to now offer that type of service to industrial customers, backed up by the solutions to deliver efficient, reliable power, is significant from both an environmental impact and a business continuity standpoint.”

Spark NZ welcomes Commerce Commission’s draft report

Spark New Zealand has welcomed the Commerce Commission’s draft report recommending the removal of the last remaining resale voice services regulation from the Telecommunications Act.
The telco said that while it has provided these services under commercial terms for well over ten years, the removal of regulation is a positive signal that our regulatory regime can adapt to reflect changing competitive dynamics.
Spark added it was already well underway in its transition from its legacy PSTN voice network to a future-ready IP-based voice network dubbed the ‘Converged Communications Network’.
“The Commission’s draft decision today, if confirmed, will provide further support to, but will not affect the pace of, that transition,” said Spark. The Commerce Commission expects to make its final recommendation in July 2019.

Spark NZ fined $675,000 for historic operational and billing issues

IN BRIEF

Spark New Zealand has been fined NZ$675,000 by the District Court in Auckland for breaches of the Fair Trading Act 1986.
The proceedings, to which Spark had pleaded guilty in a previous court hearing, were
brought by the New Zealand Commerce Commission in July 2018, in relation to two
separate historical operational and billing issues:
Incorrect implementation of a ‘welcome credit’ when joining Spark for some
fibre broadband customers during 2016; and a billing implementation relating to a 30-day notice period when customers left Spark.
Spark said it sincerely regretted the impact on customers and had taken all practicable steps to refund those customers who were billed incorrectly or did not receive their welcome credit.
The Court, meanwhile, said it has taken Spark’s conduct, including its guilty plea, into account when determining the financial penalty, noting also that Spark has fully refunded existing customers and the vast majority of former customers, and has sent a letter or email to the last known address of former customers with a credit balance of NZ$1 or mor.e

NEW BOSS FOR SPARK NZ FOLLOWING SHOCK RESIGNATION

MAIN STORY

New Zealand’s largest telco, Spark, will have a new boss from July, after the shock resignation today of Simon Moutter, who has served as managing director for seven years.

Spark made the announcement to the New Zealand Stock Exchange today, with current Spark customer director, Jolie Hodson, becoming the company’s chief executive on July 1.

Moutter has also resigned as a director of the company, effective 30 June. Spark shares on the NZX dropped sharply following the unexpected announcement.

Moutter has lead Spark through some major changes in recent times, including a big move to agile working. “In almost every respect, Spark today is a vastly different company to the one that Simon re-joined in 2012,” said Spark chair Justine Smyth.

She noted the company’s ‘rejuvenated’ mobile business, including the launch of the Skinny brand, and its entry into areas such as the Internet of Things, entertainment and sports media.

The telco recently launched Spark Sport and has secured the rights to the Rugby World Cup 2019 and the Women’s Rugby World Cup 2021, along with a slew of other big name events.

Moutter also steered the company through its rebrand from Telecom to Spark in 2014. The resignation comes at a time when Spark is making news again on the back of tensions over Huawei’s role in New Zealand’s 5G rollout.

Spark’s application to use Huawei equipment in its 5G build was declined in November, with the GCSB (Government Communications Security Bureau) citing “significant national security risks.”

Last week, New Zealand Prime Minister Jacinda Ardern while visiting China, was at pains to downplay the Huawei issues, claiming suggestions Huawei had been banned were false.

Smyth said Moutter took on the role in 2012 with the expectation that it would most likely be a five-to-seven-year tenure.

His successor has been with Spark since 2013, when she joined as CFO. She later moved into the role of CEO for Spark Digital and customer director.

“We are delighted to have confirmed a top-quality internal candidate, which speaks to Spark’s desire, where appropriate, to develop and promote talent from within,” Smyth added. “Jolie is an accomplished leader with a strong record of delivering results and managing complex business units and to be able to appoint an executive of Jolie’s calibre and experience is a testament to the quality of the talent within the company.”

“She has had experience across most major parts of Spark’s business since she joined the company in 2013,” Smyth said.

Moutter said he hasn’t made any decisions about what he will do once he leaves Spark, other than spending the first couple of months with his family.

“I feel it’s the right time to pass the leadership baton on and I am delighted the Board has chosen an outstanding leader in Jolie to succeed me,” he added.

KIWI FIBRE UNBUNDLING SPARKS ISP ANGST; FIBRE UP

New Zealand businesses are embracing fibre rapidly according to new figures, but there are storm clouds gathering on the horizon, with several ISPs already snarling over proposed pricing for new unbundled fibre services.

Last week Chorus released its proposed unbundled fibre pricing with Vocus and Vodafone – which have already showcased an unbundled offering – immediately hitting back with claims the pricing is too high and will result in a NZ$40/month price increase for fibre users.

InternetNZ quickly jumped into the fray, calling on the ISPs and Chorus to reach an agreement – quickly.

Unbundling will enable retail ISPs to gain direct access to fibre broadband cables so they can install their own technology and manage the full service to their customer, rather than having Chorus or other local fibre companies manage the broadband package details such as speed.

From next year, fibre companies – of which Chorus is the largest in New Zealand – will be required to provide unbundled services.

Chorus’ proposed pricing would see a monthly access charge of NZ$28.70 per month to cover access to the fibre between the premise and the splitter. Retail service providers would also have to pay NZ$200 per month to access the feeder fibre from each splitter – which can have up to 16 customers connected – to a central office where RSPs can pick up the unbundled service.

The network provider has warned the industry not to expect the same level of savings seen from unbundling the copper network.

Ed Hyde, Chorus chief customer officer, said: “While I’m sure some RSPs will argue for even lower input costs, the economic and technical reality of unbundling a newly-built, world-class fibre network is much more challenging than unbundling much older, often fully depreciated, copper network assets that have a fundamentally different architecture.”

“However, we are confident that an RSP that is committed to providing unbundled fibre services will be able to do so at this price point,” he added. “The pricing released for feedback today is the latest step in a near year long process of industry engagement, that has sought extensive feedback on the product and processes that will enable unbundled fibre.”

Back in the mid 2000s New Zealand went through copper unbundling – an extended process that proved to be one of the more contentious periods in New Zealand’s telecommunications history.

Jordan Carter, InternetNZ chief executive, said it would be a shame if an agreement could not be reached.

“Price is a major factor of why some New Zealanders don’t have access to the Internet. Any changes that could potentially increase Internet prices would be a terrible thing and would only expand digital divides,” Carter said. “It’s important that ISPs and Chorus work together to find a mutually agreed solution to unbundling fibre, otherwise the Commerce Commission will need to be involved to find a fair price.”

“It would be a shame if New Zealand’s Internet users had to wait for the Commission to sort this out,” he said.

Fibre growth

The flak comes as newly released Stats New Zealand figures show more than half of Kiwi businesses with six or more staff used fibre-optic broadband connections last year.

Geraldine Duoba, Stats NZ business performance manager, said: “Fibre usage has more than doubled to 52 percent, compared with four years ago. Access to faster broadband is seen as an important factor in enabling increased productivity and promoting economic growth.”

A further eight percent expect to be using fibre within a year.

The financial and insurance services industry had the highest proportion of businesses using fibre, at 82 percent, followed by the professional, scientific and technical services industry – which includes scientific research, legal and accounting, advertising and computer systems design services – at 78 percent.

Across New Zealand there were 714,258 users connected to UFB at the end of December – a 6.8 percent increase on the previous quarter.

New Zealand’s UFB build, which aims to provide UFB access to 87 percent of Kiwis across 390 towns and cities by the end of 2022, was 77 percent complete at the end of December.

The number of small businesses with no plans to use fibre has also dropped, however, 28 percent of businesses with fewer than 20 employees still say they have no plans to use fibre. That’s down from 41 percent in 2016.

KIWI TELCO 2DEGREES UPS BROADBAND BATTLE WITH AMAZON DEAL, PRICE FREEZE

Kiwi telco 2degrees is ramping up its push for the broadband market, announcing a new deal with Amazon Prime Video – it’s first big move into streaming video, and plans to hold broadband pricing steady for the coming year.

The telco is a distant player in the New Zealand broadband market, with its 78,000 broadband customers far below that of Spark’s 700,000, Vodafone’s 400,000 and Vocus’ 200,000.

The telco is offering Amazon Prime Video as an extra for customers on its unlimited plans, which start at $85/month, or $75 for customers with a pay monthly mobile plan. Amazon Prime Video is available in New Zealand for US$5.99/month.

It will, however, only apply to new customers.

“This is a global brand that has made significant strides with exclusive and award-winning content and we’re delighted to offer that to 2degrees broadband customers,” 2degrees chief of consumer, Scott Taylor, says.

The telco is a late entrant to the video streaming market as New Zealand telcos, like those around the world, seek to bolster their revenues and offset downward price pressures on connectivity, while building customer loyalty.

New Zealand’s largest broadband provider, Spark offers its own Lightbox streaming service as well as Netflix, which is the largest internet streaming service in NZ, while Vodafone has Neon.

Spark is also firing up an online sports service, Spark Sport, open to any Kiwis, not just Spark broadband customers.

The offer is just one of several initiatives 2degrees is taking to drive its broadband uptake, with the company also announcing a freeze on its residential broadband pricing for the year. That freeze follows earlier moves from other Kiwi providers including Spark, Vodafone and Slingshot who have increased their pricing, passing on increases from network provider Chorus.

“If you’re a current 2degrees customer, we’ll swallow the costs on this one and we’ll give you our work we won’t put your prices up this year,” Taylor says of the plan.

“It’s our 10th birthday this year and being fair has always been part of the DNA at 2degrees. For us, that means thinking twice before we put prices up.”