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BDFL - Memuneh
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# 250552 16-May-2019 10:05
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The Commerce Commission has today released the preliminary findings of its study into New Zealand’s mobile services market.

 

Telecommunications Commissioner Dr Stephen Gale said competition indicators such as pricing, coverage and choice of mobile services were trending in a positive direction for consumers.

 

“We have three established mobile network operators in New Zealand and all are performing well on most measures of quality. According to Opensignal, New Zealand currently ranks 8th out of 88 countries for 4G speed. Further, mobile service prices are generally lower than OECD averages, and consumers tell us they find it easy to compare plans and switch providers,” Dr Gale said.

 

“However, there is room for improvement in some areas. Prices for large data plans are noticeably higher than Australia and while mobile data use grew 69% last year, reliable 4G coverage is not so widespread. Information on performance measures like call dropping rates and coverage gaps is also hard to find.”

 

The study found that while consumers consider switching providers to be a reasonably simple process, there is currently some inertia when it comes to switching. The Commission has begun further work to better understand the impact of this inertia on consumers.

 

Dr Gale said the key challenge for competition in the future is the allocation of spectrum.

 

“Spectrum is a key cost for the three network operators: Vodafone, Spark, and 2Degrees. Imbalances in spectrum holdings between operators – across all bands – can affect competition. Our view is that, in its design of future spectrum allocation processes, MBIE should have wholesale and retail competition matters at the forefront of decisions.”

 

Competition is emerging for network operators to sell wholesale services. This allows ‘virtual’ operators such as Vocus and The Warehouse to sell mobile services to consumers, without having to build their own mobile network.

 

“We see no need to regulate at this stage but will keep an eye on the ability of new ‘virtual’ operators to access wholesale services. We expect more spectrum and consumer engagement will help this market to develop where it is commercially viable,” Dr Gale said.

 

“Overall the study found that consumers are more satisfied with mobile than with fixed line services, but there is still room to improve. We will continue to focus on consumers as part of our telco retail service quality work.”

 

The Commission is inviting submissions on the preliminary findings by 28 June 2019. A copy of the report can be found here and an infographic detailing key findings is here.

 

The Commission has also released several expert reports alongside its preliminary findings. These were commissioned as part of the study and include reports on the ‘virtual’ operator landscape globally and locally, and a view of the global industry trends relevant to mobile services.

 

Background
Section 9A of the Telecommunications Act requires the Commission to monitor competition in, or development and performance of, telecommunications markets in New Zealand. Under the Act, we can conduct studies into any matters relating to the telecommunications industry or the long-term benefit of consumers of telecommunications services. The findings of a section 9A study may lead us to consider whether any regulatory changes may be appropriate. Further investigations may include considering the amendment, removal or introduction of regulation.

We expect to publish our final findings on the Mobile Market Study on 30 September 2019.

Spectrum allocation
The Ministry of Business, Innovation and Employment’s (MBIE) business unit Radio Spectrum Management (RSM) is responsible for efficiently and effectively managing the radio spectrum in New Zealand. This includes allocating rights for the use of the spectrum and enforcing compliance with the requirements to ensure legitimate users are able to enjoy their rights.

 

Spectrum acquisitions are subject to s47 of the Commerce Act 1986, meaning that the Commission may become involved in assessing the competition implications of any given spectrum acquisition.

MVNOs
MVNOs (Mobile Virtual Network Operators) are operators that provide mobile services but generally do not own licenced radio spectrum or much of the physical infrastructure needed. Instead they rely on buying services from an operator with a full mobile network. The amount of control an MVNO has to change the services it offers to consumers will vary according to the nature of its agreement with its host mobile network.

 





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BDFL - Memuneh
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  # 2238831 16-May-2019 10:06
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Comments from Vodafone New Zealand:

 

 

We agree that pricing, coverage and choice of mobile services are all trending positively for New Zealand consumers. New Zealand is ranked number two globally in the GSM Mobile Connectivity Index 2018 across infrastructure, affordability and network performance.

 

The Commission has identified that competitive conditions currently enable MVNOs (Mobile Virtual Network Operators) to enter and compete in the market and identified two new entrants have recently announced MVNO details. Vodafone is delighted that MVNO, Kogan, is partnering with us, who will offer further choice to consumers.

 

The mobile market is competitive and healthy, with retail prices well below OECD averages, 98.5% population coverage, committed investment to extend coverage even further, three national competing networks, and 5G on the horizon that will deliver even more innovation and competition in the market.

 







BDFL - Memuneh
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  # 2239091 16-May-2019 13:03
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Vocus: ComCom mobile review is disgraceful

 

Vocus today said it was staggered that the Commerce Commission considers the wholesale mobile market as healthy and evidence of competition exists with MVNOs.

 

“We’ve been selling mobile plans through an MVNO for more than a decade now and have a grand total of 26,000 customers – and we are the largest MVNO in the country,” Vocus New Zealand Chief Executive Mark Callander says.

 

“We were expecting the Commission to realise that mobile operators have been paying mere lip service to mobile competition and to propose measures to increase competition and benefit New Zealand consumers. Today’s preliminary findings that the MVNO market is operating as it should is disgraceful.”

 

Callander said the fact that 99% of the almost 5.5 million mobile connections in New Zealand are sold by three mobile giants is clear evidence that MVNOs aren’t working in New Zealand, and that Vocus presented this strongly to the Commission.

 

“Quite frankly they have missed the mark by a long, long way here,” Callander says.

 

Callander says that internationally consumers are well served by MVNOs providers, which drive innovation, new products and competition. He compared this to the NZ broadband market, where there are more than 80 ISPs doing great things.

 

In Australia, the ACCC recently rejected the merge of Vodafone and TPG citing that the entry of a fourth mobile operator would drive improved competition and benefit consumers. Unfortunately, the Commission has formed the view that there is no evidence to support a fourth MNO in the market and the market structure is working well from an MVNO perspective. In an emerging 5G world, this decision will have a crippling effect as the mobile operators gain unfair advantage and an alternative network to replace fixed line services.

 

Vocus believes the Commerce Commission needs to regulate MVNO services so that MVNOs have a real opportunity to establish, gain scale and become competitive. It says a framework for regulation of mobile services needs to be established; and in the absence of regulation, any change in MVNO service provision is unlikely to happen in the next 5 to 10 years, denying New Zealand’s mobile customers the innovation and price advantages associated with a competitive market.

 





 
 
 
 




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  # 2239093 16-May-2019 13:08
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TUANZ welcomes Commission’s preliminary findings but warns vigilance needed.

 

TUANZ welcomes the Commerce Commission's preliminary findings contained in their initial report on the state of the mobile market in New Zealand, which has been released today.

 

“As the only membership based group representing the users of digital technology and connectivity, the importance of a report such as this, prepared by an independent statutory organisation cannot be underestimated.” said Craig Young , CEO of TUANZ.

 

“Our members have continued to tell us that while they recognise that the NZ market has delivered increased competition, they wanted this independent review undertaken to identify areas where the market needs improvements to increase competitive outcomes.”

 

TUANZ is pleased to see that the review recognises that the market is generally headed in the right direction, which reflects the feedback from a recent member survey on this topic.

 

TUANZ also identified the two key issues that the Commission raises in this initial report. On the topic of the allocation of scarce spectrum to operators in NZ, we have pushed strongly for a more holistic approach in this area. We strongly believe that the national interest and the interest of users should be taken much more into consideration than a simple auction for the highest price. This would include ensuring regional players are able to participate as well as allowing the possibility of additional new entrants into the market. Our concern is that this is not current Government Policy, and while the Commission has identified it as an issue, it is a Government Department (MBIE) that controls allocation. We call on the relevant Minister’s to take cognisance of the Commission's view in this area and look to make changes to the upcoming allocation rounds, especially for the development of 5G networks.

 

The second issue is around user choice when it comes to the number of operators offering services. Our members have indicated to us that whilst they are comfortable with the current range of providers, they would be keen to see further targeted options. In Australia we see 1 million connections being provided by MVNOs or Wholesalers rather than the MNOs themselves, and while this is only 3% of the total market, they do represent over 29% of the prepaid market. We are still very keen to see growth in the wholesale marketing of services and welcome the recent announcements of two new MVNO deals. We will respond to the Commission's report asking them to be vigilant and keep a very close eye on developments over the next short period before making their final decisions on whether there is a need for some form of regulatory reform in this market.

 

The Chair of TUANZ, Liz Gosling (CIO Auckland University of Technology) reiterated that “As the truly independant representative group of users of these services, we will continue to fully engage with our members to ensure that their views are represented to the Commission as they undertake the next steps in this review.”

 





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  # 2239550 16-May-2019 21:37
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