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.

Going, going, gone: Vodafone NZ sold for $3.4b

Vodafone has sold its New Zealand business to Kiwi infrastructure investment company Infratil and Canadian asset management firm Brookfield Asset Management in a NZ$3.4 billion deal.

Vodafone New Zealand chief executive Jason Paris dubbed the deal “the absolute best of both worlds for customers,” claiming it gave New Zealand’s number one mobile telco and number two fixed broadband player “the backing of two world class and long-term investors, while enabling it to still tap into Vodafone’s global expertise.”

Talk of a potential sale reignited last week when Infratil confirmed talks were taking place and a trading halt was put in place on the New Zealand Stock Exchange. Infratil owns airport, transport, electricity generators and retailers across Australia and New Zealand, including Canberra Data Centres, TrustPower – which as well as providing power is New Zealand’s joint fourth largest fixed broadband player with 5% market share – RetireAustralia and NZ Bus.

Brookfield, meanwhile has a focus on owning and operating assets in the infrastructure, real estate and renewable power markets and has more than US$365 billion in assets under management.

Vodafone NZ had been planning to list on the NZX after the New Zealand Commerce Commission axed its plans to merge with Sky TV.

The company had revenue of NZ$2.0 billion in the 12 months to March 31, 2019, with underlying EBITDA of NZ$463 million for the period.

Paris, who took on the top role with the telco late last year, says the key things – strategy, people, management team, brand and ability to tap into Vodafone’s global products and services – ‘remain the same’.

“What changes is our owners, who back our ambitious plans for New Zealand and who share our views on the importance of creating sustainable, long-term profitability in order to reinvest in the future. So it really is the best of global and local.”

Paris says the company will look to maximise the opportunities presented by new and emerging technologies, such as IoT, 5G, artificial intelligence and data analytics.

“And we know we have a lot of work to do to deliver more consistent customer service so we’ll focus even more on getting it right for our customers, first time, every time.”

Infratil says agreements in place with Vodafone Group – under which Vodafone NZ will become the company’s largest Vodafone Partner Market worldwide – will see global roaming remain in place while other services are expected to be transitioned away from Vodafone Group over the next one to five years.

In a statement to the NZX, Infratil says the acquisition of New Zealand’s leading mobile telco company is ‘transformational’ for Infratil and complements its acquisition of Canberra Data Centres in 2016.

Marko Bogoievski, Infratil CEO says Vodafone NZ was rigorously assessed over the past few months. “We have done an extensive amount of work to ensure we understand the opportunities available to the business, in particular, the ability to use next generation 5G technology to significantly enhance network capability and future services to Vodafone NZ customers,” he says.

Analysts have suggested the deal will provide Vodafone with the funding for a 5G build.

Bogoievski says the deal gives some local ownership to Vodafone NZ ‘which will be important in terms of how we work together to grow the business over the coming years’.

Vodafone NZ has been in the midst of a project to cut costs, return to business growth and improve customer experience. That project has seen a move to agile – including reportedly will see it cutting up to 400 staff from its nearly 3,000 strong workforce – and an IT simplification and automation program enabling customers to be set-up, served and billed from a single platform.

The deal is expected to complete in August, subject to regulatory approval from the New Zealand Overseas Investment Office and the Commerce Commission.

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 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.

The Kiwi wrap: UFB complaints, Fortinet deal for schools and Vodafone’s new fibre bridge

UFB complaints increase

Complaints about ultrafast broadband installations are on the rise in New Zealand, according to the latest report from the Telecommunications Dispute Resolutions.

The TDR, an industry body comprising a set of some 95% of the nation’s telco providers by revenue, which handles complaints for the sector, recorded 666 complaints and enquiries in the January to March quarter. Billing issues remained the largest source of complaints at 39% or 265 complaints/enquiries, with disputed charges the greatest proportion of billing complains.

Fibre installations, meanwhile, prompted 48 complaints/enquiries, or 7.2% of overall issues raised, behind customer service, faults and contracts – with TDR noting that while UFB installation complaints are on the rise, they “remain in proportion to the rise of installations across New Zealand.”

Vocus and Trustpower have continued to top the complaints list for New Zealand telcos for the Jan-Mar 2018 quarter, with 2.7 and 2.5 complaints per 10, 000 connections, respectively.  Both firms recorded a slight increase in complaints for the quarter.

Spark recorded just 0.5 complaints and enquiries per 10,000 connections, with 2degrees logging 0.7, and Vodafone 1.0 per 10,000.

Fortinet network security for Kiwi schools

New Zealand’s schools are to receive “more robust protection against online threats” with a new upgrade to the Network for Learning managed network, as usage across the network has soared to hit more than 12 petabytes in the first two terms.

The upgrade will see schools transitioning to a combined enterprise-grade firewall and internet filtering service from Fortinet. Improved internet filtering tools, modifiable to suit individual classes and students, and smart reporting will also be part of the upgrade, along with offerings to enable schools to manage attempts to bypass their internet filtering with virtual private networks.

Network for Learning (N4L) is a crown company whose network connects more than 2,400 schools across New Zealand.

The network has seen data usage almost double year-on-year. N4L said more than 374 million websites and 118.000 virus and malware threats have been blocked across the managed network in the first two terms this year.

Hawera High School in Taranaki is one school recently affected by ransomware, with student work and teaching resources among the files encrypted – with a demand of US$5,000 in bitcoin made for the return of the data. The school had opted out of N4L’s current security offering…

Vodafone serves up fixed wireless as fibre bridge

Vodafone New Zealand is offering a fixed wireless broadband service, targeting those customers waiting for fibre to be installed.

The Ultimate Home Fibre plan will provide customers with a mobile broadband connection via Vodafone’s 4G/3G network while they wait for a fibre connection.

The telco said its new service will make it easier for people to switch to fibre. “Our customers tell us they are frustrated by installation wait times, while others say they are putting off a move to fibre because they simply don’t want to be disconnected while they wait,” added Vodafone consumer director Matt Williams.

Vodafone claims ‘tens of thousands’ of customers across all providers are waiting for fibre, which is installed by Chorus and other local fibre companies.

Kiwi Roundup: All change as two key NZ execs depart; Kordia wins SD-WAN deal

It’s been a week of change in the Kiwi market, with news of two key executives – the head of Vodafone NZ and New Zealand’s government chief digital officer and Department of Internal Affairs boss – stepping down. Meanwhile, Kordia is celebrating a big SD-WAN win.

Change at the top for Vodafone NZ

Vodafone NZ chief executive Russell Stanners has announced he is stepping down from the top job at the end of October, after 13 years in the role. Jason Paris, Vodafone director for Convergence Acceleration for the AMAP region and former Spark NZ home, mobile and business CEO, will take over the role on November 1.

Screen Shot 2018-06-15 at 2.26.17 PM

Stanners, who joined Vodafone NZ in 2002 as the company’s first enterprise director, was appointed to the CEO role in 2005. Vodafone AMAP regional CEO Vivek Badrinath said Stanners has “transformed” the company from a consumer mobile business to a digital technology leader, providing fixed, TV, converged and mobile services to more than two million customers.

NZ chief digital officer resigns

Also leaving – this time from a role as New Zealand’s government chief digital officer and chief executive of the Department of Internal Affairs – is Colin MacDonald.

Paul James, currently chief executive of the Ministry for Culture and Heritage will take over from MacDonald as secretary for Internal Affairs and DIA chief executive in October.

MacDonald has been the DIA chief executive since 2012, moving across from his role as CEO of Land Information NZ, where he led the cross-government programme for data and information re-use. His time at the DIA saw procurement panels introduced for all of government purchasing of ICT.

The New Zealand government has struggled to fill the newly created role of government chief technology officer, sparking speculation that MacDonald could be headed there.

The news of MacDonald’s departure was one of a flurry of announcements on changes in public service executives, with the Ministry of Defence, Ministry of Justice, Department of the Prime Minister and Cabinet and Ministry for Primary Industries also gaining new bosses over the next 12 months. All of the appointments are transfers from other government departments.

“Colin MacDonald is stepping down as Secretary for Internal Affairs, to pursue new opportunities,” State Services Commissioner Peter Hughes said. “I have huge respect and admiration for Colin, who has made a significant contribution in a number of senior leadership roles since joining the Public Service in 2001 after a notable career in the private sector. I thank him for his service.”

Kordia Cisco Meraki-based SD-WAN offering to bring peace of mind to Wise Group

Korida is rolling out a 54 site SD-WAN offering, based on Cisco Meraki equipment, for New Zealand mental health and wellbeing provider Wise Group.

The SD-WAN is expected to reduce Wise’s wide area networking costs by up to 50%, while also simplifying management and operation of the WAN and increasing flexibility, performance and capabilities.

Wise already uses Kordia’s SecureWAN offering, but Mark Thorn, Wise Group general manager of information services, said the company was looking for ‘something more flexible and recognised that we didn’t need the bulletproof quality of service of a traditional WAN.

“Probably the biggest advantage of SD-WAN is that it delivers flexibility,” Thorn said. “We can extend the WAN to wherever it needs to go, whenever we need it to go there; it is easy to split off to temporary residential sites, for example, and it opens the pipes for full speed access along with all the corporate policies we want to provide.”