16 May 2019

Kiwis well-served for mobile services - Commerce Commission

1:39 pm on 16 May 2019

The mobile sector has been found to be serving New Zealanders reasonably well and not in need of any further regulation at this stage.

New Zealand's largest two telecommunications companies are too big to be threatened by their competitors.

The Commerce Commission found mobile providers such as Vodafone and Spark and 2degrees provide healthy competition in the sector. Photo: RNZ / 123rf

The Commerce Commission released the early findings of its market study into mobile services on Thursday.

It found they rank high globally for speeds, are priced lower than the average of developed countries and garner generally positive feedback from consumers.

However, telecommunications commissioner Dr Stephen Gale said there was room for improvement, with prices for large data plans noticeably higher than in Australia.

"For data allocations that are quite large around about 40 gigabits a month you can see the data price per gigabit in New Zealand is in amongst the values of Australia ... the price per gigabit in Australia for a 12-month contract is substantially lower than the levels here."

Dr Gale noted those sorts of contracts for data were uncommon here, with most consumers on open plans.

The commission also examined what was happening with wholesale services, and found that increasingly, there is competition in the space, with virtual operators like Vocus, the Warehouse and other new players wanting services to on-sell to their customer bases without having to invest in a network.

Although, it found only 1 percent of customers here were served by virtual operators, compared with 10 percent in Australia.

Dr Gale was satisfied competition was adequate.

"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."

The Commerce Commission had plans to further investigate why mobile customers tend not to switch companies despite it being a simple process, and whether that could be encouraged to boost competition.

It also noted the effect spectrum allocation - a large cost for network operators - has on competition and advised the government take it into account when auctioning off spectrum next year.

Commission 'missed the mark'

As expected, the country's largest mobile companies Vodafone and Spark welcomed the commission's findings.

However, the largest virtual operator Vocus, disagreed with the commission's findings.

"Today's preliminary findings that the [virtual operator] market is operating as it should is disgraceful," Vocus chief executive Mark Callander said.

"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."

Mr Callander told the commission that three networks were not enough to foster competition, and they would have an unfair advantage when they launched 5G networks.

"Quite frankly they [the commission] have missed the mark by a long, long way here."

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