2007 New Zealand - Telecoms Overview, Statistics and Analyses

Publication Date	December 2006
Publisher	BuddeComm
Product Type	Report
Pages	173
ISBN Number	not applicable
Product Code	BUD00107

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Summary

Telecom New Zealand maintains a stranglehold on the local access market in fixed-line voice and broadband. It has made steady progress during 2006 with strong growth in broadband and data services; however, it is still heavily reliant on revenue from declining traditional services. Total market growth of around 3.9% is predicted in 2007 and 3.6% in 2008, down from 4.1% in 2006. The combined fixed network voice and local access market displayed negative growth for the first time in 2006. This negative growth will gradually accelerate over the next few years. Mobile growth will, however, begin to taper off as the market approaches saturation.

It was not until mid-2006 that the government put legislation in place that will pave for the way for Local Loop Unbundling (LLU). Both LLU and an upsized UBS service should, but will not necessarily, allow triple play services. While upsized UBS went live in 2006, LLU and Naked DSL are still waiting for introduction, perhaps in late 2007 or possibly even as late as 2008.

This report provides a detailed overview, including statistics, forecasts and analysis, of the regulatory, infrastructure, fixed network voice and VoIP sectors of the New Zealand telecommunications market.

Market overview

The total telecoms market in New Zealand grew by 4.1% from $7.75 billion in 2004/05 to $8.03 billion in 2005/06.
Total market growth of around 3.9% is predicted in 2007 and 3.6% in 2008.
Telecom maintains a stranglehold on the local access market in fixed-line voice and broadband.
The combined fixed network voice and local access market displayed negative growth for the first time with growth of -1.8%. This negative growth will gradually accelerate over the next few years: -2.0% is predicted for 2007 and -3.0% for 2008.
Data and broadband will take over from mobile services as the key driver of overall market growth from 2007 to 2010.
Mobile service still grew very strongly in 2005/06, displaying 8.6% growth.
Mobile growth will, however, begin to taper off over the next few years as the market approaches saturation, with revenue growth of 6.1% predicted in 2007 and 5.0% in 2008.

Key players in the market

Telecom made steady progress during 2006 with strong growth in broadband and data services; however, it is still heavily reliant on revenue from declining traditional services.
Telecom is expected to launch high-speed ADSL2+ broadband services on its Next Generation Network (NGN) beginning in 2007.
TelstraClear expects to launch its first high-speed mobile broadband and voice service by mid-2007.
CallPlus has a strategy to roll out WiMAX nationally and has investment backing for the $250 million that will be needed from 2006 to 2010 to achieve this goal.
In late 2006 Vodafone New Zealand acquired 100% of local ISP ihug. The partnership opens up exiting opportunities for the pair in the area of fixed-to-mobile convergence in 2007 and 2008.
Kordia, formerly known as THL Group which included BCL, is working with New Zealand broadcasters to deliver digital television in 2007.

Telecommunications infrastructure

By late 2006 New Zealand trailed behind most of the western world in the adoption of high-speed broadband access.
The government's decision not to agree to go ahead with LLU until in mid-2006 has meant that ADSL2 and ADSL2+ adoption has been very slow. It now appears that LLU is unlikely to be implemented before late 2007.
In August 2006 Telecom finally announced that its NGN was now expected to be completed over a two year period to 2008.
For the past few years the industry has seen a significant rise in the use of wireless technologies as serious competition to the more traditional copper and fibre optic-based solutions.
A number of niche fibre optic networks have also been established.

Regulatory

In June 2006 the government introduced a new Telecommunications Amendment Bill to parliament, regarding new broadband access regulations.
The Bill enables the introduction of unbundling of the local loop and accounting separation for Telecom.
The Bill also amends the existing unbundled bitstream service and its supporting backhaul service to remove the existing constraints placed upon it.
Access seekers are now given assurance that they can purchase Naked DSL services without any requirement to purchase an analogue telephone service.
Although by 2006 there had been a regulatory UBS in place for some time, the speed was slow, especially on the uplink.
Both LLU and an upsized UBS service should, but will not necessarily, allow triple play services. While upsized UBS went live in 2006, LLU and Naked DSL are still waiting for introduction perhaps in late 2007 or possibly even as late as 2008.
In December 2006 the Finance and Expenditure select committee made recommendations for amendments to the Telecommunications Amendment Bill that would see the operational separation of Telecom.
There is no doubt that the implications of the proposed new amendments to the Telecommunications Bill would have a major impact on the telecommunications market in 2007 and 2008.

Fixed network voice and VoIP markets

In 2006 Telecom maintained its virtual monopoly over the local access market, with an untouchable market share of 80%, which has been relatively steady since 2003.
The fixed network voice market declined by 1.8% in 2006 and we predict that it will decline a further 2% in 2007.
A key driver for the decline in local call revenues during 2006 was a migration from dial-up Internet access to broadband. Long-distance calling prices in particular continued to fall.
The market also continues to shrink at the expense of alternative access networks such as mobile and VoIP as well as products based on data and IP-based solutions.
ihug, acquired by Vodafone in 2006, is one of the smaller alternate providers that has potential to make some inroads in the market, although from a very small base.
While there has been significant adoption of VoIP and IP telephony amongst the business sector, especially amongst larger organisations, residential VoIP adoption in New Zealand is lagging most of the developed world.

Content

1. Market Overview
- 1.1 Telecommunications infrastructure
  - 1.1.1 Overview
  - 1.1.2 Next Generation Networks (NGNs)
  - 1.1.3 Fibre optic networks and Fibre-to-the-Home (FttH)
- 1.2 Regulatory environment
  - 1.2.1 Local Loop Unbundling (LLU)
- 1.3 Fixed network voice market
- 1.4 VoIP overview
2. Market And Industry Analysis
- 2.1 Overall market analysis
  - 2.1.1 Making up the balance of Telecom's promises
  - 2.1.2 Scale and volume
  - 2.1.3 Strong government policies
  - 2.1.4 Share holders interest
  - 2.1.5 Infrastructure problems
- 2.2 Telecom - analysis
- 2.3 TelstraClear - analysis
- 2.4 Vodahug - action time
- 2.5 Changing the telecoms environment
  - 2.5.1 Global Perspective 1
  - 2.5.2 The policy changes in May 2006
  - 2.5.3 Global perspective 2
- 2.6 NGN by 2008
- 2.7 Mobile on the way to 4G
- 2.8 Broadband moving to ADSL2
- 2.9 Digital media - where are the leaders?
- 2.10 Regulatory review
- 2.11 Structural vs operational separation
- 2.12 Unfinished regional business
3. Key Statistics
4. Major Players
- 4.1 Telecom Corporation of New Zealand
- 4.2 Telstraclear Ltd
- 4.3 Vodafone New Zealand Ltd
- 4.4 ihug
  - 4.4.1 Company ownership, subsidiaries
  - 4.4.2 Company analysis
  - 4.4.3 Recent developments
  - 4.4.4 Company strategy
  - 4.4.5 Subscribers statistics and financial results
  - 4.4.6 The ihug network
- 4.5 Kordia
  - 4.5.1 The Kordia network
  - 4.5.2 Wireless broadband
  - 4.5.3 Digital TV rollout
  - 4.5.4 Digital Audio Broadcasting (DAB)
  - 4.5.5 Video-over-IP broadcasting
  - 4.5.6 Company analysis - Kordia, is the sleeping giant waking up?
- 4.6 CallPlus
  - 4.6.1 Partnership with People Telecom
  - 4.6.2 Company background
- 4.7 Compass Communications
  - 4.7.1 Overview
  - 4.7.2 Agreement with Vodafone
- 4.8 Southern Cross Cable Network
  - 4.8.1 Network overview
- 4.9 WorldxChange Communications
  - 4.9.1 Overview
  - 4.9.2 Network
5. Revenue And Forecasts
- 5.1 Revenue statistics by major providers
  - 5.1.1 Overall market
  - 5.1.2 Telecom and TelstraClear
- 5.2 Revenue statistics by market segment
  - 5.2.1 Overall market
  - 5.2.2 Mobile
  - 5.2.3 Data, ISP and broadand
  - 5.2.4 Fixed network voice and local
6. Fixed Network Voice Market
- 6.1 Local access and fixed voice market overview
  - 6.1.1 Telecom continues to dominate the local access market
  - 6.1.2 Smaller players start to gain limited traction
  - 6.1.3 Market trends moving into 2007 and 2008
- 6.2 Local access and calling statistics
- 6.3 Local access and calling revenues
  - 6.3.1 Total market revenues - 2006 - 2008
  - 6.3.2 Telecom revenues and market overview - 2006
- 6.4 Market surveys
  - 6.4.1 Fixed-line pricing performance
- 6.5 Market trends and analysis
  - 6.5.1 The future of voice
  - 6.5.2 New approach needed to measure ARPUs
7. Voip Market
- 7.1 New Zealand market developments
- 7.2 VoIP adoption trends
- 7.3 Global market trends
  - 7.3.1 VoIP, VoIP and more VoIP
  - 7.3.2 VoIP will not be effective without upgraded broadband
- 7.4 Corporate market surveys
  - 7.4.1 IP telephony adoption in the business sector
  - 7.4.2 PBX market
- 7.5 VoIP activities by telcos
  - 7.5.1 Slingshot
  - 7.5.2 CallPlus & Slingshot to launch WIMAX/VoIP service
  - 7.5.3 Australian VoIP provider Engin to enter New Zealand market
  - 7.5.4 Skype and other VoIP-based services
  - 7.5.5 Telecom and TelstraClear
  - 7.5.6 Woosh Wireless
  - 7.5.7 Broadcast Communications Ltd
  - 7.5.8 WorldxChange Communications
- 7.6 Advantages of implementing VoIP systems
- 7.7 Major corporate VoIP rollouts in New Zealand
  - 7.7.1 Guardian Healthcare
  - 7.7.2 IBM New Zealand
  - 7.7.3 Public Trust
  - 7.7.4 Financial services firm ASB
  - 7.7.5 Open Polytechnic
- 7.8 VoIP regulatory issues in New Zealand
8. Infrastructure
- 8.1 Telecommunications infrastructure in New Zealand
  - 8.1.1 Market overview
- 8.2 Network access technologies
  - 8.2.1 Copper cables
  - 8.2.2 Fibre networks
  - 8.2.3 Local metropolitan fibre network initiatives
  - 8.2.4 Wireless
- 8.3 Internet peering
  - 8.3.1 What is Internet peering?
  - 8.3.2 Internet Peering Exchanges in New Zealand
  - 8.3.3 Dark fibre
- 8.4 Analyses
  - 8.4.1 How to speed up telecoms innovation in New Zealand
  - 8.4.2 Global FttH analysis - mid-2006
- 8.5 Rural telecommunications
  - 8.5.1 Government targets fast fibre rollouts for 15 towns
  - 8.5.2 Small local switches network
- 8.6 Government intitiatives
  - 8.6.1 Government's high-speed advance network
- 8.7 Telecom's network
  - 8.7.1 National network
  - 8.7.2 Data network
  - 8.7.3 Next Generation Network (NGN)
  - 8.7.4 Rural and intra-island networks
  - 8.7.5 International connections
  - 8.7.6 AAPT's Australian network
- 8.8 Telstraclear's network
- 8.9 Market analyses
  - 8.9.1 Slowly but surely structural changes are underway
- 8.10 Global FttH trends
  - 8.10.1 Different FttH business models
  - 8.10.2 National economy drivers
  - 8.10.3 Social drivers
  - 8.10.4 Entertainment drivers
  - 8.10.5 'Go with the flow' strategies
  - 8.10.6 New housing developments
9. Regulatory Environment
- 9.1 LLU and interconnection
  - 9.1.1 Local Loop Unbundling and UBS overview
  - 9.1.2 LLU and UBS market developments
  - 9.1.3 Fixed-to-mobile call termination
  - 9.1.4 Interconnection
- 9.2 Telecommunications Act and TSO
  - 9.2.1 Telecommunications Act
  - 9.2.2 Major reforms on telecoms policy - 2006
  - 9.2.3 Other market developments related to the Telecommunications Act - 2006
  - 9.2.4 Market analysis - regulatory review - November 2006
  - 9.2.5 Extension of period of regulation of telecommunication services
  - 9.2.6 Telecommunications Service Obligations (Kiwi Share)
- 9.3 Wholesale and number portability
  - 9.3.1 Wholesale access
  - 9.3.2 Number Portability (NP)
10. Company Profiles And Analyses
- 10.1 Telecom Corporation of New Zealand
  - 10.1.1 Company information
  - 10.1.2 Revenue statistics - 2006
  - 10.1.3 Market developments and strategy overview
  - 10.1.4 Company structure
  - 10.1.5 Mobile services
  - 10.1.6 The network
  - 10.1.7 Subsidiary and associate companies
  - 10.1.8 Outsourcing agreements
  - 10.1.9 Other services
  - 10.1.10 Financial statstics 2006
  - 10.1.11 Company analyses
- 10.2 TelstraClear
  - 10.2.1 Company information
  - 10.2.2 Operating statistics - 2006
  - 10.2.3 The network
  - 10.2.4 Major deals and contracts - 2006
  - 10.2.5 Regulatory developments
  - 10.2.6 Company analysis
  - 10.2.7 Products and services
- 10.3 Vodafone New Zealand Ltd
  - 10.3.1 Company information
  - 10.3.2 Recent company events
  - 10.3.3 The network
  - 10.3.4 Partnerships and wholesale agreements
  - 10.3.5 Financial results - 2006
  - 10.3.6 Subscriber and operating statistics
  - 10.3.7 Company analyses
  - 10.3.8 Products and services
- 10.4 SKY Network Television New Zealand
  - 10.4.1 Company information
  - 10.4.2 Services
  - 10.4.3 Subscriber statistics - 2006
  - 10.4.4 Financial results - 2006
  - 10.4.5 Acquisition of Prime TV
  - 10.4.6 Company analyses
  - 10.4.7 Programming
11. Glossary Of Abbreviations
List Of Exhibits
- Exhibit 1 - Fibre network overview by provider - 2006
- Exhibit 2 - Skype hacked by Telecom?
- Exhibit 3 - Fibre network overview by provider - 2006
- Exhibit 4 - Residential Broadband (BB) - growth predictions - next ten years
- Exhibit 5 - Understanding wholesale bitstream offers around the world
- Exhibit 6 - Telecom Corporation New Zealand at a glance
- Exhibit 7 - Subsidiary companies - 2006
- Exhibit 8 - Associate companies - 2006
- Exhibit 9 - TelstraClear Ltd at a glance
- Exhibit 10 - Vodafone New Zealand Ltd at a glance - 2006
- Exhibit 11 - Comparison of Vodafone's 3G mobile networks
- Exhibit 12 - SKY Network Television Ltd at a glance - 2006
List Of Tables
- Table 1 - Country statistics - 2006
- Table 2 - Telecom revenue statistics - 2006
- Table 3 - Telephone network statistics - 2006
- Table 4 - Internet provider statistics - 2006
- Table 5 - Internet user statistics - 2006
- Table 6 - Broadband statistics - October 2006
- Table 7 - Mobile statistics - June 2006
- Table 8 - Broadcasting statistics - Pay TV and FTA TV - 2006
- Table 9 - ihug subscribers by market segment (New Zealand only) - 2004 - 2006
- Table 10 - ihug revenue and annual change - 2001 - 2006
- Table 11 - iiNet revenue by region (Australia & New Zealand) and annual change - 2005 - 2006
- Table 12 - iiNet - profit before tax by region (Australia and New Zealand) - 2005 - 2006
- Table 13 - Total telco market revenue by major provider - 2002 - 2007
- Table 14 - Annual change of total telco market revenue by major provider - 2003 - 2007
- Table 15 - Percentage breakdown of total telco market revenue by major provider - 2002 - 2007
- Table 16 - Telecom Group financial highlights - 2000 - 2006
- Table 17 - Telecom Group financial highlights - annual change - 2001 - 2006
- Table 18 - NZ operations - telecom services revenue and annual change - 2005 - 2006
- Table 19 - Total market revenue by major service - 2004 - 2008
- Table 20 - Annual change of total market revenue by service - 2005 - 2008
- Table 21 - Percentage breakdown of total market revenue by major service - 2004 - 2008
- Table 22 - TelstraClear - total revenue and annual change - 2001 - 2007
- Table 23 - Mobile market revenues by operator - 1997 - 2008
- Table 24 - Mobile market revenue growth by operator - 1998 - 2008
- Table 25 - Mobile market revenue - market share by operator - 1997 - 2007
- Table 26 - New Zealand data market revenues by sector - 2004 - 2007
- Table 27 - New Zealand data market percentage growth by sector - 2005 - 2008
- Table 28 - New Zealand data market percentage breakdown by sector - 2005 - 2007
- Table 29 - ISP revenue estimates and annual change - 2002 - 2008
- Table 30 - Total market - local service & calling revenue by provider - 2003 - 2008
- Table 31 - Market share - local service & calling revenue by provider - 2003 - 2006
- Table 32 - Total market - annual change in local service & calling revenue by provider - 2001 - 2008
- Table 33 - Fixed lines in service and teledensity - 1995 - 2006
- Table 34 - Fixed lines in service by operator and annual change - 2004 - 2006
- Table 35 - Telecom call minutes and annual change - 2005 - 2006
- Table 36 - Telecom (NZ operations) national calling minutes and annual change - 2003 - 2006
- Table 37 - Total market - local service & calling revenue by provider - 2003 - 2008
- Table 38 - Market share - local service & calling revenue by provider - 2003 - 2006
- Table 39 - Total market - annual change in local service & calling revenue by provider - 2001 - 2008
- Table 40 - Telecom (NZ operations) local service, calling revenue & annual change - 2005 - 2006
- Table 41 - Pricing performance for fixed-line telephone services - 2005
- Table 42 - Telecom Group financial highlights - 2000 - 2006
- Table 43 - NZ operations telecom revenue telecommunications services & annual change - 2005 - 2006
- Table 44 - TCNZA revenue summary and annual change - 2000 - 2006
- Table 45 - Telecom Group financial highlights - 2000 - 2006
- Table 46 - Telecom Group financial highlights - annual change - 2001 - 2006
- Table 47 - Capital expenditure - 1998 - 2006
- Table 48 - NZ operations financial highlights and annual change - 2005 - 2006
- Table 49 - NZ operations telecom revenue telecommunications services and annual change - 2005 - 2006
- Table 50 - NZ operations calling revenue and annual change - 2005 - 2006
- Table 51 - NZ operations mobile revenue, ARPU and annual change - 2005 - 2006**
- Table 52 - NZ operations data revenue and annual change - 2005 - 2006
- Table 53 - NZ operations broadband & Internet revenue and annual change - 2005 - 2006
- Table 54 - NZ operations IT services revenue and annual change - 2005 - 2006*
- Table 55 - AAPT consumer & business revenue and annual change - 2001 - 2007*
- Table 56 - Telecom Australian operations by service and annual change - 2005 - 2006
- Table 57 - Telecom Australian operations - calling, mobile, data, Internet revenue and annual change - 2005 - 2006
- Table 58 - Total revenue and annual change - 2001 - 2007
- Table 59 - EBITDA, EBIT, CAPEX and annual change - 2005 - 2006
- Table 60 - Customer numbers - 2004; 2006
- Table 61 - Vodafone 2G and 3G network cell sites - October 2006
- Table 62 - Vodafone revenue overview and annual change - 1996 - 2007
- Table 63 - Vodafone annual profit and annual change - 2002 - 2006
- Table 64 - Monthly ARPU - prepaid, postpaid and total - 2003 - 2006
- Table 65 - Vodafone subscriber statistics & annual change - 1998 - 2007
- Table 66 - Subscriber statistics by quarter - 2004 - 2006
- Table 67 - Subscriber statistics by network - 2005 - 2006
- Table 68 - Voice minute usage on network - 2005 - 2006
- Table 69 - Vodafone Group subscriber & revenue growth - New Zealand versus selected countries - 2005 - 2006
- Table 70 - New Zealand 3G subscribers - mid-2006
- Table 71 - Total UHF, DBS and other subscribers - 2003 - 2006
- Table 72 - Subscriber growth - UHF, DBS and annual change - 1993 - 2007
- Table 73 - Average monthly revenue per residential subscriber and annual change - 2004 - 2006
- Table 74 - Group revenue overview and annual change - 2005 - 2006
- Table 75 - Revenue overview and percentage change - 1997 - 2007