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.

Kiwi wrap: Spark DX hits profits, but Vocus revenue climbs; ComCom action for Vodafone NZ

By Heather Wright, Assistant Editor

 Agile costs Spark

Spark New Zealand’s profits have taken a hit, despite a reduction in labour costs, as the telco transitions to Agile as part of its digitisation programme.

The company has reported a net profit of $385 million, down 7.9% on last year’s $418 million. Revenue was up $35 million, or 1.0%, to $3,65 billion, with mobile revenue up 6.9% and cloud, security and service management revenue up 15.1%. Legacy voice, managed data and networks revenues were all down to the tune of $100 million, offsetting those gains.

In May Spark announced it was accelerating its Quantum business improvement programme. that action accounted for $49 million in costs, for the FY18 year, including $24 million which were brought forward.

Spark chair Justine Smyth says the decision to accelerate the Quantum programme was based on increasing confidence the telco could improve customer experience and operate under a lower cost structure in an Agile model.

Labour costs were down $82 million to $581 million on the back of the programme, which saw 1900 staff told to sign up to the new Agile work practice or be made redundant, in June.

Vodafone NZ joins Spark in court

Vodafone New Zealand has been charged with making false representations in customer invoices.

The 10 charges, laid by the New Zealand Commerce Commission, cover the five years from January 2012 to January 2017, when the Commission alleges Vodafone sent invoices billing customers after their contract had finished.

The Commission says Vodafone sent the invoices, for full month billing periods, after agreeing with customers to terminate their service pay way through the month.

The matter will have its first hearing in the Auckland District Court next month.

Last month Spark was also in the commission’s firing line, with 11 charges laid alleging false or misleading representations relating to its billing and a $100 offer for new customers.

Those charges arose from three separate alleged failings, including overcharging for broadband data when a fault in the broadband network misrecorded customer data usage; and an offer of $100 credit for new customers to a broadband plan which was sent to prospective customers but failed to mention the offer could only be redeemed by phoning Spark, not joining online. The Commission alleges the letters created the impression customers could sign up online.

The third alleged failing mirrors the action against Vodafone, with customer’s final bills including charges for entire month billing periods after customers had left Spark.

Vocus results vindicate abandoning NZ sale 

Vocus has reported growth across its entire Kiwi operations, with revenue up 4% and to account for N$363.5 million, or AU$335 million, of Vocus’ overall AU$1.9 billion group revenue for FY18.

The results, which Vocus says were negatively impacted by foreign exchange rates to the tune of AU$8.2 million, come just months after Vocus decided not to sell it’s Kiwi business after failing to receive an ‘appropriate’ offer.

The enterprise and wholesale business, was up 5% to AU$162.1 million, with consumers up 2% to AU$172.9 million. Underlying EBITDA was up 8% to $56.6 million.

Broadband consumer numbers were up 3%, with a 60% increase in ultrafast broadband customers offsetting a 15% decline in copper broadband numbers.

SMB customer numbers were up 5%, while mobile customer numbers increased 14% and the company’s move into energy retailing increased with a 240% increase in energy customers, something the company attributes to improved bundling in the consumer segment and additional sales investment in the SMB segment.

Vocus says it plans to double revenue from its core enterprise, government and wholesale markets in New Zealand within five years, leveraging its fibre and network assets.