Living on a small, isolated island full of sheep and strange birds, it's little wonder that New Zealanders relish the opportunity to connect with the rest of the world.
New Zealand estimates there are currently nearly two million dial-up and broadband connections in New Zealand, and just under four million mobile internet connections. Not bad for a country of 4.7 million.
Spark is New Zealand's largest supplier of fixed phone lines, its biggest internet provider, with nearly half of the total New Zealand market and nearly 700,000 broadband customers, and, together with Skinny, it's also New Zealand's biggest mobile provider.
Providing high quality connectivity and services to homes and businesses throughout New Zealand is no mean feat.
In mobile services, Spark is one of three major mobile network operators who each compete for customers over their own network of cell towers, utilising radio spectrum licensed from the Government. Sometimes we co-locate our electronic equipment on another operator’s cell tower, to save the cost of building a separate tower. For instance, this has happened on most of the new towers built under the Government’s Rural Broadband Initiative to improve broadband services in rural areas.
When it comes to fixed services provided over fibre or copper lines, the industry structure is quite different. The local line networks (sometimes referred to as the “last mile”) are owned by wholesale companies which must be separate from the retailers like Spark that provide services to customers. It’s a bit like the network companies own and maintain the train tracks, while Spark runs our trains over these tracks.
The national copper line network is owned by Chorus while the fibre network being built in cities and larger towns under the Government-sponsored ultra-fast broadband (UFB) programme is owned by four different companies, each with a monopoly in their region. Ultrafast Fibre is responsible for Hamilton and other towns in Waikato, Taranaki and Whanganui; Enable in Christchurch and parts of Canterbury; North Power in Whangarei; and Chorus in the rest of the country including Auckland, Wellington and Dunedin.
Chorus and the local fibre companies are required to provide the same access to their networks, and charge the same, to Spark and any other broadband retailer (these line charges, which are set by law, make up about half the cost of a typical fixed broadband plan). They are also responsible for installing fibre into a home or business when a customer places an order with Spark.
Spark transmits data, content and voice traffic to and from end users, across our own core data network around New Zealand and via international internet cables to places right around the world. We are an investor in some of those international cables – the Southern Cross Cable system that connects New Zealand with Australia and the United States, and the new Tasman Global Access cable being constructed to add another international link to Australia.
Telecommunications is a regulated industry sector in New Zealand, with the Commerce Commission overseeing the industry. As part of this regulation, telecommunications companies are required to pay an annual Telecommunications Development Levy, which is used to pay improve New Zealand's telecommunications infrastructure (especially in rural areas which are economically challenging to service). The current levy is $50 million annually, of which Spark’s share is approximately $19 million.
New Zealanders are quick to adopt new technologies and give new services a go. We’re already among the world’s heaviest users of smart phones for banking, shopping and searching for local businesses and services, and mobile data use is expected to grow sevenfold by 2019.
Since 2015, the popularity of streaming TV services like Lightbox has caused a 30% jump in household broadband data usage, which has grown to 48GB per month per subscriber. Mobile data usage has also nearly doubled since last year, now averaging 390MB per connection per month.
To meet the expectations of its data-hungry consumers, investment is booming. Projects like UltraFast Broadband and 4G mobile technology have contributed to a record investment of $1.77 billion per annum – the second highest rate in the OECD.
New Zealand’s 4G mobile download speeds are among the fastest in the world, and broadband speeds are getting faster.
Data distribution company Akamai has measured average broadband download speeds in New Zealand at 9.3Mbps, and TrueNet has reported that speeds are now less likely to slow during peak hours.
Services are increasingly competitively priced. Unlike almost every other type of household expenditure, consumer telecommunications costs have declined, and mobile pricing decreased by 46% in the two years to 2014. The price of a monthly bundle of voice calls and data in New Zealand, whether broadband or mobile, is less than the OECD average, and customers on entry-level broadband plans now get more data than before.
Contribution to the economy
With everything going on, telecommunications is by necessity an arena of great innovation and growth. The ICT sector has been growing at more than 9% pa and currently accounts for $3.09 billion of our GDP.
UltraFast Broadband, which will see at least 99% of New Zealand enjoying 100Mbps download speeds, and the Rural Broadband Initiative, which will achieve 5-50Mbps peak broadband speeds for those outside UFB areas, are expected to further grow our GDP by $5.5 billion over 20 years. And in healthcare, education, business and agriculture, advancements in the use of digital technologies are expected to save $32 billion.