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Mobile market in good shape to deliver benefits for consumer


The Commerce Commission has today released the findings of its study into New Zealand’s mobile services market.

The Commission’s final report found the established presence of three independent, national network-based providers has resulted in mobile consumers benefitting from an increasingly competitive market environment.

“Having assessed the state of competition in the mobile market we haven’t identified any particular problems or structural issues that could be hampering competition,” Telecommunications Commissioner Dr Stephen Gale said.

The study also concluded there is an emerging market for ‘virtual’ operators to sell mobile services to consumers without having to build their own mobile network. This includes companies such as Vocus, Warehouse Mobile and Kogan which offer mobile services based on commercial wholesale agreements with the network operators. Trustpower also intends to enter this market and, like Vocus, bundle mobile offers with its existing broadband and energy services. Because of these developments, the Commission does not consider there is any need for regulation of wholesale access at this time.

“With Spark, Vodafone and 2degrees each having a network of similar technology with similar geographic and population coverage metrics, looking forward we consider the allocation of spectrum to be particularly important for future competition. In our view, there is a need for wholesale and retail competition matters to be at the forefront of decisions relating to MBIE’s upcoming allocation of 5G spectrum,” Dr Gale said.

“While we consider that, overall, mobile services are in good shape, we do think there is room for consumers to keep pressure on providers to compete harder on price and service quality. At the moment a lot of mobile customers tend to stick with their providers and are somewhat reluctant to switch even though they know it is easy to do so.”

The study found 60% of consumers say it is easy to compare plans though 68% rarely if ever do, and 54% haven’t switched providers in the past 5 years.

“By shopping around more frequently consumers are likely to trigger more competition between mobile providers. We are keen to see more consumer activity and will be looking into ways we can help New Zealanders understand whether they are getting the best deal possible and, if not, consider switching,” Dr Gale said.

Some of the other findings from the study include:
• New Zealand ranks 8th out of 88 countries for 4G speed and more than 96% of consumers have 4G coverage
• Average mobile data usage per month has more than doubled in the past two years
• Prices for mobile services have been falling and compare well with other OECD countries
• Spark, Vodafone and 2degrees are all profitable and have collectively invested $2.5 billion in their mobile networks over the past decade
• Average revenue per user has declined slightly to around $25 per month when handset revenues are excluded.
A copy of the final report can be found on the Commission’s website.

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.

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.

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