NZ Telecommunications Reports – Ind. Roundtables

Executive Summary

The New Zealand mobile market is now approaching saturation and mobile subscriber growth will taper off significantly in 2007 and 2008. During 2006 the trend of ISP consolidation slowed; however, moving forward into 2007 and 2008, commoditisation of products is likely to see the speed of ISP consolidation pick up once again. The long-awaited government policy on Local Loop Unbundling (LLU) was finally introduced in New Zealand in mid-2006.

A growing number of wireless broadband players, including Woosh Wireless and CallPlus are also making some inroads into the market and this trend will continue into 2007. ADSL2 was the prevailing high-speed broadband technology deployed in New Zealand in late 2006. Broadcasting’s ad revenues are gradually being squeezed due to falling audiences and rising costs.

The progressive introduction of ADSL2+ broadband will enable the delivery of new services on top of Telecom’s broadband infrastructure. Services delivered over its NGN in 2007 and 2008 will include VoIP, video calling, converged fixed/mobile offerings, Interactive television and VoD.

This report provides a detailed overview, including statistics, forecasts and analysis, of the mobile, Internet, broadband, convergence and broadcasting sectors of the New Zealand telecommunications market.

Key highlights:

Mobile
•The current mobile market is a duopoly of Vodafone New Zealand and Telecom Mobile.
•They operate the only cellular networks in the country, although Vodafone has also partnered with TelstraClear to resell its mobile offerings.
•Vodafone took the number one spot in mobile subscribers in New Zealand back in 2003 and now holds 55% of the subscriber market.
•TelstraClear expects to launch Unplugged, its first high-speed mobile broadband and voice service, by mid-2007.
•A fourth player, Econet Wireless New Zealand (EWNZ) was, by late 2006, in the process of rolling out a network.
•The New Zealand mobile market is now approaching saturation and mobile subscriber growth will taper off significantly in 2007 and 2008.
•Both Telecom and Vodafone launched 3G offerings during 2005, and in September 2006 Vodafone launched its upgraded HSDPA mobile broadband network capable of significantly faster speeds. Telecom plans to launch its upgraded EV-DO Revision A network by the end of 2006.
•Mobile technologies are not well suited for mobile data beyond certain niche markets. While these networks can handle high-speed data, it is unlikely that this will be able to be achieved at prices low enough to penetrate the mass market.

Broadband, Internet and data
•During 2006 the trend of ISP consolidation slowed; however, moving forward into 2007 and 2008, commoditisation of products is likely to see the speed of ISP consolidation pick up once again.
•The ISP market is expected to further consolidate beyond 2006, as more ISPs will financially struggle to survive.
•A growing number of wireless broadband players, including Woosh Wireless and CallPlus are also making some inroads into the market and this trend will continue into 2007.
•In August 2006 Orcon was preparing to deploy a high-speed broadband ADSL2+ network that will feature IPTV services.
•Wireless broadband remains very much a niche medium in New Zealand with usage restricted principally to regional areas outside the coverage of fixed ADSL and cable services.
•New Zealand’s data market continues to outpace other market segment in terms of growth and market share.
•Life is getting tougher for the ISPs as customers migrate from higher margin dial-up services to the much lower margin broadband services.
•The key to success in this market is the adoption by the Broadband Service Providers (BSPs) of the triple play model, delivering voice (VoIP), Internet access and video (broadband TV) over the one broadband connection.
•Driven by broadband, revenue growth in the data market is expected to increase to 11% in 2007 and 12% in 2008.

Table 1 – Annual growth of residential broadband subscribers by major provider – 2005 - 2006
Provider 2005 2006
Telecom: Residential 200% 52%
TelstraClear 50% 53%
Ihug n/a 75%
Woosh Wireless 60% 63%
CallPlus n/a 134%
(Source: BuddeComm based on company data)

Broadcasting
•A number of interesting urban and rural fibre network rollouts in New Zealand are laying the foundation for high-speed networks capable of triple play service delivery.
•The progressive introduction of ADSL2+ broadband will enable the delivery of new services on top of Telecom’s broadband infrastructure. Services delivered over its NGN in 2007 will include VoIP, video calling, converged fixed/mobile offerings, Interactive television and VoD.
•Vodafone’s merger with ihug in late 2006 opens up some exiting opportunities in the area of fixed-to-mobile convergence.
•Broadcasting’s ad revenues are gradually being squeezed due to falling audiences and rising costs.
•In late 2006 New Zealand lagged behind most of the developed world in the transition to digital television. By this time in New Zealand, it was only being broadcast by pay TV operator SKY on a satellite platform in the DVB standard, which also rebroadcasts some radio services.
•In June 2006 the government anticipated transmission of FTA digital TV would begin early in 2007.
•SKY Network Television (SKY) is the only major service provider in the market. SKY has a retransmission agreement with TelstraClear under which TelstraClear operates its own network and manages all aspects of customer service.

Paul Budde

Roundtable Program Auckland 4 December and Wellington 5 December

The New Zealand market today
• May you live in interesting times
• Top level indicators
• Critical misalignment - industry & customers
• Making up the balance of Telecom’s promises
• Unshackle Telecom
• 2nd tier market brought to brink by Telecom
• 2nd tier market Fundamentals still strong

Overall market stats
• Key market share and growth data

Major players
• 2002 to 2006: The Golden years for Telecom
• Telecom lies between a rock & a hard place
• TelstraClear remains in limbo
• Vodahug action time

Telecoms access & regulatory
• Telecoms access: dramatic changes ahead
• Wholesale ongoing dramas
• Finally LLU, but is it too late?
• Triple play will radically change pricing structure
• Telecom to launch NGN
• Access will move to free models
• 2010 -2015: NGN & FttH will pervade

Regional telecommunications
• Regional broadband is massively under-funded

Voice
• Revenue and subscriber statistics
• Voice revenue decline will accelerate in 2007 & 2008
• VoIP will begin to make an impact in 2008

Mobile
• Revenue and subscriber statistics
• Mobile market in 2007
• Mobile market heating up
• 4G will see rise in mobile data & content
• 4G will win the battle over WiMAX

ISP, Broadband & data market
• Revenue and subscriber statistics
• ISP market trends
• ADSL2+ will take off in 2007
• Wireless broadband will remain a niche medium
• Dialup and broadband overview
• Broadband market revenues
• Next level of broadband (2006 – 2010)
• Next opportunity.. wireless personal broadband
• Data market will be key driver of growth

Broadcasting
• FTA TV & Pay TV
• Digital TV

Emerging Digital Media Market
• New digital media environment
• NZ too slow to adopt digital media
• Media Centres

Conclusion…
• Massive market changes
• The new age of telecommunications

Booking, venue and background information
Venues:
Auckland:
Langham Hotel
83 Symonds Street
Auckland
New Zealand
T: +64-9-920-6907

Wellington:
InterContinental Hotel
2 Grey Street
Wellington
New Zealand
Tel: +64 4 472 2722

Booking:
Online registration: http://www.budde.com.au/consultancy/public-workshops-seminars.html
Telephone: +61 2 4998 8144 or E-mail: pbc@budde.com.au

PAUL BUDDE Communication Pty Ltd,
T/As BuddeComm
http://www.budde.com.au
BuddeComm operates the largest, continually updated, telecommunications research service on the Net

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