Home Industry Deals Market Lack of competition cramping NZ broadband

Broadband users in New Zealand have long looked enviously at their counterparts in Australia where monthly data quotas are much larger and costs per gigabyte much lower. Now a study by market research firm Market Clarity has revealed that Australian ISPs actually pay more for connectivity and capacity than the Kiwis, and it is lack of competitive pressure that is keeping New Zealand prices high.

After all network costs (network access, domestic backhaul and IP Transit) are taken into account, Market Clarity found that Australian retail broadband ISPs retain a median profit margin of 26.3 percent of ARPU, while New Zealand ISPs have a median margin of 38.8 percent of ARPU.

New Zealand respondents to Market Clarity's survey spend around $A26.07, or $NZ33.50 per customer, per month on network costs (network access, backhaul and IP transit); Australian respondents spend $A37.54, or $NZ48.24, per customer, per month on total network costs.

The study, Understanding the Trans-Tasman Broadband Value Gap: ISP Costs in Australia and New Zealand, based on interviews with retail ISPs on both sides of the Tasman, also found that Australian ISPs devote more ARPU to wholesale service costs (such as ADSL access services, domestic backhaul, and IP Transit) than their counterparts in New Zealand.

"The results are surprising," said Market Clarity CEO Shara Evans. "There is a widespread perception, particularly in New Zealand, that the costs of international services drive the difference between the allowances offered Australian and New Zealand broadband customers.

"However, our research suggests that other factors are more significant. These might include the different domestic regulatory regimes in the two countries, and the competitive pressure brought about by Australia's much larger number of retail ISPs."


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Stuart Corner


Tracking the telecoms industry since 1989, Stuart has been awarded Journalist Of The Year by the Australian Telecommunications Users Group (twice) and by the Service Providers Action Network. In 2010 he received the 'Kester' lifetime achievement award in the Consensus IT Writers Awards and was made a Lifetime Member of the Telecommunications Society of Australia. He was born in the UK, came to Australia in 1980 and has been here ever since.