Summary of Fixed Telephone Network Service Performance
4. Using the standard OECD basket of fixed network telephone services, New Zealand's relative performance in residential (23rd out of 30) and business telephone (22nd) service was placed just above the OECD average price. However, in both cases the relative performance ranking fell into the lower end of the third quartile of OECD relative performance.
5. When the OECD residential basket of telephone services is modified to better reflect actual call use by most residential users in New Zealand, New Zealand's relative pricing performance ranks in the top quartile of the OECD. New Zealand and a number of other OECD countries have significantly higher residential call usage than the standard OECD basket comparison methodology takes into account.1 In addition, New Zealand is one of a small number of OECD countries where residential telephone service users have access to a significant range of capped price calling options, including in some cases unlimited call options.
6. Business telephone service relative pricing would have to reduce by up to 38% to rank in the top quartile of OECD performance or up to 25% to rank in the second quartile. However, the business telephone service price used in the comparison did not include an allowance for lower prices in areas where there is competitive provision of business access service. (Largely central business districts and industrial complexes where TelstraClear and other facility based service providers have a presence.)
7. The average price of residential fixed to mobile calling was found to be significantly higher in New Zealand than the OECD average and relative performance was in the fourth quartile of OECD countries. This ranking does not take into account the lower priced fixed to mobile calls available from some other providers. However, relative pricing would have to reduce by up to 65% to rank in the top quartile of OECD performance or up to 50% to rank in the second quartile.
8. The average price of business fixed to mobile calling was found to be on a par with the OECD average price and the relative performance ranking just makes it into the third quartile of OECD countries. Relative pricing would have to reduce by about 41% to rank in the top quartile of OECD performance or up to 21% to rank in the second quartile.
9. The unit price of residential national calls, as measured by the Statistics New Zealand CPI, has not reduced significantly in the last three years.
Summary Data: Residential and Business Telephone Services| Telephone Service Basket | Call minutes per month | Basket price - % of OECD average | NZ Basket services per annum spend | OECD Country Ranking
(out of 30) | Price reduction to rank in OECD 1Q/2Q |
| Standard OECD basket | Residential | 3802 | 119% | ~$800 | 23rd | ~36% / ~27% |
| Business | 11103 | 108% | ~$1937 | 22nd | ~38% / ~25% |
| Non-standard NZ residential basket (~1460 local call minutes) | 1520 | 54% | ~$800 | 2nd | none |
| Low residential user (access only, no calls) | 0 | 104% | ~$308 | 19th | ~27% / ~7% |
| Non-standard, fixed-to-mobile call basket only | Residential | 20 | 166% | ~$151 | 27th | ~64% / 50~% |
| Business | 60 | 105% | ~$302 | 22nd | ~40% / ~21% |
Residential Telephone Service OECD Basket Price Comparison, February 2004
→ Full size version of "Residential Telephone Service OECD Basket Price Comparison, February 2004" [40 KB GIF file]
Key Points
10. The price of residential telephone service, taking into account typical local call usage in New Zealand, was ranked in the top quartile of OECD countries performance;
11. Although the price of business telephone service in New Zealand is on a par with the OECD average, it is significantly higher (34%) than the highest price in the top 15 OECD countries;
12. The price of residential fixed-to-mobile calls in New Zealand is significantly higher than most other OECD countries. High fixed-to-mobile pricing is an issue that is currently being investigated by the Telecommunications Commissioner.
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