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Telcos Transitioning to Digital

IDC New Zealand has released its annual telecommunications market report for 2018 titled Telco Wars: A New Hope. The report says New Zealand telecommunications companies are transitioning to become genuine digital services providers.

The transition means that New Zealanders can expect a wider range of digital products and services from their traditional telecommunications providers.

Monica Collier, IDC Research Manager, says, "New Zealander's are now starting to enjoy the benefits of a new world of digital services. It’s a combination of the Government's investment in fibre, which provided the much-needed high-speed infrastructure, coupled with the changes in how and what the telcos provide.”

“The telcos are turning to new ways of working, for example, Spark and Vodafone are flattening their management structures and moving to more collaborative team work approach, while network provider Chorus has a new tagline: "nothing happens if it's not digital", says Collier.

Collier says 2018 has been a watershed year for streaming content in New Zealand.

“Stuff Fibre launched Stuff Pix, Vodafone launched Vodafone TV, TVNZ streamed four channels of content during the Commonwealth Games, and next year, New Zealanders will stream the Rugby World Cup, courtesy of Spark. This wouldn't be possible without our nationwide fibre connectivity and Spark's shift to a digital services focus,” says Collier.

IDC's retail price tracking shows that the average price of a typical unlimited fibre connection (100Mps download / 20 Mbps upload speed) has fallen to NZ$83.25 per month. Retailers, such as Spark or Vodafone, are offering free months or account credit when customers sign up. Including these deals, the average price paid falls to NZ$68.40 per month. Collier says that strong competition means “great value for the consumer.”

Collier says that fierce ongoing retail competition meant the telco industry widely expected market consolidation a year ago. Instead, telcos are now leaning towards partnerships.

"We’ve seen Vocus and Vodafone partner to unbundle fibre, while Spark, Vodafone and 2degrees formed the Rural Connectivity Group. Telcos are partnering at an infrastructure level to achieve goals with economy of scale, but are still competing at a retail level," explains Collier.

Collier says the next two years in the telco market will be "action packed".

“In less than a year New Zealanders will watch streamed Rugby World Cup matches, and Australian online retailer Kogan will enter the New Zealand mobile market. At the same time, Chorus and the LFCs (local fibre companies) are designing new products to let retailers put their own electronics in cabinets, known as fibre unbundling. This will let retailers, such as Vocus and Vodafone, create new products and services.”

“By 2020, New Zealanders can expect next-gen telcos to launch high-performance 5G networks in the mobile market and to offer widespread fibre unbundling in the fixed market,” says Collier.

Done well, Collier says 5G and fibre unbundling are the two key enablers that will hasten the shift away from traditional connectivity towards true digital services.


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