Telecom NZ’s falling fixed-line call revenue

While this year's $100 million drop looks horrendous, Telecom NZ’s fixed-line business has fallen more slowly than its overseas counterparts.

Goldman Sachs says Telstra’s equivalent rate of decline accelerated over the last four years as that company’s mobile calling accelerated. In comparison, Telecom NZ’s mobile call business has grown more slowly.

It's structural

In the past, industry insiders have told me one historic reason for New Zealand’s relatively slow decline in fixed-line calling is Telecom NZ’s price structure.

Customers pay Telecom NZ a high – by international standards – fixed monthly connection fee, then pay nothing more for local calls. Overseas most telcos charge users a per-call fee. This fee structure encourages New Zealanders to make a fixed-line call where they might otherwise have used a mobile.

Optimistic?

The Goldman Sachs figures could be too optimistic for Telecom NZ. If New Zealand’s telcos manage to convince households to sign for UFB fibre services, they’ll drop traditional fixed-line calling for VoIP services. And mobile calling is still growing in New Zealand.

One piece of good news for New Zealanders: Goldman Sachs says Telecom NZ prices are below Telstra’s in “all three comparable calling service categories.”