Download Weekly: Big three dominate

ComCom monitoring report: NZ telecom market remains concentrated

The Commerce Commission’s 2024 Telecommunications Monitoring Report names decreasing the industry’s high level of concentration as the regulator's key priority.

Telecommunications commissioner Tristan Gilbertson underlines this in his foreword to the report, where he writes:

“This year’s report also reminds us that the sector remains highly concentrated – and that dealing with this concentration is an ongoing challenge.”

Mobile dominated by vertically integrated players

This concentration is most pronounced in mobile. Collectively Spark, One NZ and 2degrees control 97.5 percent of the market. The monitoring report describes their dominance as resilient, with their combined share declining by only 1.1 percent in the past five years. It says:

“Unlike fixed broadband, the mobile segment has seen minimal disruption and remains a stable three-player oligopoly.”

While the report acknowledges mobile virtual network operators have made progress, it says New Zealand remains among the bottom OECD countries for MVNO penetration.

Urban broadband

Things are better in urban broadband, although there’s still concentration. Here the same top three companies collectively enjoy a 73 percent share.

Moving to a wholesale model 15 years ago fixed the problem of vertical integration. New entrants, especially power retailers bundling broadband, are making headway and customers do have choice.

The Commerce Commission frets that switching rates remain low among broadband service providers. Another concern is that customer satisfaction with broadband is falling.

Rural broadband

New Zealand’s three large telcos only have 55 percent market share of rural broadband. One of the fastest growing competitors is Starlink. The report notes:

“Wisps still serve 16% of rural homes, but many are losing ground to satellite competitors and are now investing in fibre to remain competitive”.

Around 10 percent of New Zealanders don’t have a broadband connection. The report identifies cost as the main barrier and notes the problem is more serious in rural areas.

What’s coming?

The report concludes with a look at the significant change happening this year. It notes four major market events: Fibre Boost upgrades (the report mentions Chorus but other fibre companies are doing the same); the arrival of Amazon’s Kuiper satellite network, the launch of direct to mobile services and
the 3G network shutdown.

Quick take

It's slow, but there is clear progress on market competition. In 2009 when the telecommunications market was reset as Chorus emerged from Telecom NZ, the market had one giant, one big player and a string of minnows. As recently as three years ago you could characterise the retail market as two big players and two second tier companies followed by smaller firms.

We've moved from a near-monopoly to a near-duopoly to an oligopoly. Further reducing market concentration is important, but these things don't happen overnight.

TCF offers emergency fact list

A new fact sheet from the Telecommunications Forum aims to help people get ready for an emergency. TCF CEO Paul Brislen says the industry has done much work to ensure services and networks are more resilient, but if networks are affected in an emergency, being informed and prepared can make a huge difference.

The fact sheet includes a checklist itemising things to do ahead of an anticipated emergency and advice on how to cope after the event.

RNZ: Calls for a better emergency call system after outage

RNZ Morning Report's Ingrid Hipkiss interviews TCF CEO Paul Brislen about the industry's response to the current network outage in Golden Bay. They also discuss what needs to change for a more resilient network and emergency service.

School WiFi upgrade hits two-thirds milestone

Network for Learning (N4L) says it is two-thirds of the way through a school wireless network upgrade. When finished, around 2500 schools will have new switches and access points. The upgrade forms part of the Ministry of Education’s Te Mana Tūhono programme.

Alongside the hardware upgrade, N4L has also moved 500 schools to its upgraded managed network.

Silverdale School, shown in the photo, was battling inconsistent connections and speeds due to ageing access points prior to the upgrade.

Principal Cameron Lockie says: “The kids would try to get onto their devices, and they’d get the spinning wheel of death and not be able to connect to the network. Our lessons get planned around using our Chromebooks, but if you can’t get onto the network, it becomes a frustration for everyone.”

Lockie says without the new network there was a danger that the Chromebooks the school purchased could be gathering dust.

US Starlink customers face US$750 ‘congestion charge’

In what could be a taste of things to come for New Zealand, Starlink is billing rural US customers with a “congestion charge”.

This ranges from US$100 in some areas, US$500 in others and US$750 in Washington state. The company is also throttling video streaming speeds in places.

With US customers still paying for satellite dishes, the initial costs in some areas is now US$1100. If the same charges applied in New Zealand, consumers would pay around NZ$1800 plus GST taking it over NZ$2000.

This congestion comes despite the Starlink constellation growing to 7,875 satellites and suggests capacity may not be scaling along expected lines.

Dacombe-Bird to head Google Cloud NZ

Google Cloud has hired Tim Dacombe-Bird to head Google Cloud in New Zealand. Dacombe-Bird was previously with Wiz, the cloud security firm, for around 18 months. Before that he spent a decade with AWS and was the New Zealand country manager.

In other news...

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Scientists mourn loss of MethaneSAT
Neal Wallace writes up the failure for Farmers Weekly. It may not be a satellite, but the story underlines how those orbiting ‘cell towers in the sky’ are more vulnerable than the cell towers built on ridge lines and urban poles.