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Pesky trans-Tasman broadband gap persists

Kiwi users have historically paid higher prices for broadband than our Aussie counterparts, and although costs continue to decline, that gap looks unlikely to close anytime soon.

A market analysis by telecommunications analyst firm Market Clarity shows while the New Zealand broadband scene has become more competitive, prices in Australia are dropping faster than we can keep up.

While the gap narrowed from 2010 to 2011, Kiwi users are generally offered lower plan quotas for any given plan than Australians.

The best value is generally only available to users paying higher monthly subscription prices; at the 'premium' end, Kiwi ISPs are closing the 'value gap' for larger data packages, but the price difference when it comes to mid-range plans has worsened. 

"Customers of ‘budget' plans in New Zealand still fare poorly compared to customers in Australia," Market Clarity chief executive Shara Evans said.

"For example, for $AU29.99 per month, an Australian customer is offered a monthly allowance of 20 GB, while a New Zealand customer paying $NZ20 per month receives an allowance of just 1 GB."

Broadband plan distributionThe report, Closing the Trans-Tasman Broadband Value Gap, indicates the median price per gigabyte is falling in both countries, albeit more quickly in Australia.

From 2010 to 2011 the median price in Australia decreased from A$1.12 to $0.37 per GB. In New Zealand, the median price fell from A$4.60 to $2.17.

According to the study, Australian ISPs began upgrading data allowances without lifting prices during that time. In other words, higher allowances filtered downward to lower priced plans. This saw the emergence of 1TB plans.

New Australian offerings introduced to the market saw the median and maximum plan prices decrease, while the reverse took place in New Zealand.

Kiwi broadband plans tend to cluster at the lower end of the price spectrum, bu tallowances  are much smaller, yielding a high price per GB.

Price per GB

Whether New Zealand ISPs can catch up depends not only on their willingness to do so, but on their ability to overcome the challenges of scale, the report concluded.

Evans said: "I would expect that as broadband affordability continues to improve in New Zealand, higher-capacity services will become more popular among users, and competitive pressure will give users greater choice of higher-capacity services at more affordable prices."

The study analysed close to 200 broadband plans offered by 11 ISPs, including Orcon, Slingshot, Telecom, TelstraClear and Vodafone in New Zealand. The full report can be downloaded here

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