Goverment Report out of touch with NZ's broadband reality

Stuart Corner
Monday, 19 December 2011 12:09

Your IT - Home IT

New Zealand's Commerce Commission has published a report benchmarking the country's telecommunications services against those overseas, but its findings on the price of broadband Internet services are at odds with reality.

The report is the Commission's second that benchmarks New Zealand prices for fixed line and mobile telecommunications services against international prices, and the first that looks at the price of broadband services in New Zealand compared to overseas, both as a standalone product or combined with voice services.

According to the Commission's announcement of the report "For standalone broadband, New Zealand's pricing is not significantly higher than the international benchmark average for low and medium users, and is lower than Australia." This, it says "may reflect the competitive pressure for broadband services, including the impact of continued unbundling of local exchanges by internet service providers."

However what the Commission considers to be 'low' and medium' usage are, by Australian standards, 'very low' and 'low' respectively, and its finding that "For larger data users New Zealand is one of the most expensive countries benchmarked," in reality refers to what Australians would consider a low to medium amount of data.

The report found that, in New Zealand "10GB is not significantly higher than the international benchmark average, and is lower than Australia," and "For the 60GB naked broadband basket, New Zealand's price is 77 percent greater than the benchmark average."

A much more realistic  assessment of how poorly Kiwis fare in the broadband stakes compared to their counterparts across the Tasman emerged last month in Statistics New Zealand's annual Internet survey. It showed that over two thirds of almost 1.5 million Internet users in New Zealand have less than 20GB per month, and less than 30,00 have data caps in excess of 50GB.

The issue of New Zealand's low data usage was raised by InternetNZ in August, when it published a discussion paper on 'Barriers to Unmetered Domestic Internet Traffic'.

Commenting on release of the paper, InternetNZ CEO, Vikram Kumar said: "It is clear that New Zealand's very low data caps are a result of a number of factors. These range from market failure, lack of concerted consumer pressure and fears of consumer confusion. The recent increase in fixed-line broadband data caps by Telecom and Vodafone only underline how much room there is for the major ISPs to move on this issue."

The paper suggested: "The incumbency of Telecom NZ in the copper local loop market and the reliance on a single submarine cable for almost all international transit," as two possible reasons for the high prices and low data caps.

It added: "The price paid by ISPs for international transit has been dropping significantly; therefore if data caps do not greatly increase as they have in Australia recently it is likely to be incumbency around the copper loop which is keeping them low."