The Commerce Commission has released a report benchmarking 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 overseas.

For voice (and SMS) services, benchmarking has been carried out against other OECD countries. In relation to broadband, New Zealand prices have been compared to those in Australia, the UK, Norway and Sweden.

The report shows that due to the high monthly line rental charge and to a lesser extent relatively high fixed-to-mobile calling prices, New Zealand ranks poorly in the OECD benchmarking of fixed line voice services. Consumers who make few calls a month face the highest line rental in the OECD, while medium to high users of mobile voice services also have a poor rank under OECD benchmarking.

“Having no alternative to a plan with a fixed price for unlimited local calls favours those consumers who make a lot of local calls and disadvantages those who make few. Consumers making few monthly calls effectively cross-subsidise consumers who make a large number of calls,” said Dr Ross Patterson, Telecommunications Commissioner.

The report also looks at the price of broadband services in New Zealand compared to prices in four other countries.

“Although the Commission is cautious about drawing definitive conclusions from limited fixed line broadband benchmarking, it appears that the price of broadband in New Zealand for low and medium users is in line with that observed in other countries. High users, however, face a significantly higher price in New Zealand compared to other similarly developed countries,” said Dr Patterson.
While it is often argued that New Zealand’s geographical isolation and the cost of international bandwidth is causing New Zealand’s higher prices, the report notes that Australia faces a similar issue, yet prices in Australia are significantly lower than New Zealand for high users.

The report also indicates that the price of mobile broadband is high across all levels of usage, and significantly higher in the high use basket (over 8 GB) where New Zealand prices are almost triple those of the cheapest country, Sweden.

In comparison to Australia, New Zealand consumers pay significantly more for mobile voice and SMS plans for medium and high usage. In particular, for the OECD’s 300 calls per month mobile basket the cheapest price for Australia is less than half that for New Zealand.

For broadband, Australia is cheaper than New Zealand in every mobile usage basket and for the 200MB basket the price in New Zealand is almost double that in Australia. For fixed line broadband, New Zealand is cheaper than Australia for low and medium usage (2GB and 10GB), but significantly (31 per cent) more expensive for high usage (40GB plus).

The telecommunications benchmarking report 2010 is available on the Commission’s website www.comcom.govt.nz/telecommunications-market-reports