The Commerce Commission has released its second report that benchmarks New Zealand prices for fixed line and mobile telecommunications services against international prices.

Retail price benchmarking gives an indication of the competitiveness of New Zealand telecommunications markets relative to other countries by comparing prices paid for telecommunications services by New Zealand consumers with the prices paid by consumers in other Organisation for Economic Co-operation and Development (OECD) countries.

For the first time, the report looks at the price of broadband services in New Zealand compared to overseas, both as a standalone product or combined with voice services.

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 may reflect the competitive pressure for broadband services, including the impact of continued unbundling of local exchanges by internet service providers.

For broadband bundled with traditional voice services, New Zealand’s pricing is less competitive given the high price of voice services. This situation may lead to consumers switching to cheaper, digital voice services sold with broadband.

The report also shows that for residential fixed-line voice services New Zealand prices are considerably higher than the OECD average. The key reasons for this is the high monthly line rental charged by Telecom, and the lack of alternative plans tailored for low levels of voice usage. These factors reflect the limited competition in the fixed-line market.

In the mobile services market, the report shows that New Zealand’s mobile pre-pay pricing is significantly higher than Australia except for when the predominant use is for text messaging, where the price is lower than Australia and the OECD average.

New Zealand mobile post-pay pricing is generally higher than the OECD average and significantly higher than Australia. Australia has had the benefit of a more competitive mobile market than New Zealand for many years. For higher users of mobile voice services, pricing is also significantly above the OECD average.

For mobile phone data New Zealand's pricing is below OECD average for small amounts of data (50MB per month) but well above OECD average for large amounts of data (500MB per month).

You can view the report on the Commission’s website at: www.comcom.govt.nz/telecommunications-market-reports


Background

The Commerce Commission is responsible for monitoring and reporting on competition in telecommunications markets and on the performance and development of those markets.

Since 2007, the Commission has been releasing regular reports on the state of telecommunications markets in New Zealand and reporting on key developments.

This report is one of a series of reports prepared and published by the Commission under the Telecommunications Act 2001.