Broadband Internet Access Service Performance
Uptake of Broadband Service
30. New Zealand has good broadband access availability, estimated to be in excess of 95% of dwellings. This compares favourably with other OECD countries. Most broadband access in New Zealand is through DSL on the existing copper local loop. There is broadband competition in particular areas via alternative access technologies, although the penetration of these is not high.
Households with Broadband in December 2004
→ Larger version of "Households with Broadband in December 2004" [8 KB GIF file]
31. Broadband Internet access service uptake in New Zealand, at 10.9% of households as at December 2004, is less than half of the OECD average.
32. Residential broadband household uptake will in general follow the well known s curve. On this measure Korea is nearing saturation at ~74% of households. Most other OECD countries are still in the early take-up phase of development. From the residential user perspective, household take up of broadband service is a more meaningful residential user measure than broadband subscribers per 100 population which includes both residential and business users.
Residential Broadband Household Uptake
33. The following chart tracks the growth of broadband connections across the OECD for the years ending December 2001 to December 2004. It is based on OECD data.
OECD Broadband Subscribers per 100 Population (December Years)
34. The chart illustrates that while New Zealand's per capita growth at 2 lines per 100 people in 2004, was significant, it was, however, less than many other OECD countries per capita growth in broadband lines.
35. Broadband uptake in New Zealand is still low relative to other OECD countries. New Zealand's broadband uptake as at December 2004 was 4.7 lines per 100 population, compared with the OECD average of 10.1. New Zealand's overall ranking in December 2004 was 22nd out of 30, the same as it was in December 2003.
Business Broadband Service Pricing
36. In the absence of an internationally agreed business broadband benchmarking methodology, the Ministry was advised by Azimuth Consulting to use the following service standard definition as an interim basis for benchmarking such services. In some OECD countries a service compliant with the benchmark (in general the upstream speed) was not available and therefore the nearest roughly equivalent available service was used.
| Service parameter | Business Internet |
|---|
| Down load speed | 2 Mbps |
|---|
| Up load speed | 512 kbps |
|---|
| Data Volume | 10 GB per month |
|---|
| IP addresses | 1 static IP address |
|---|
| ISP fees | Included |
|---|
37. The definition was used to compile the following relative performance rankings.
OECD Country Business Broadband Service Rankings (June 2005)
→ Larger version of "OECD Country Business Broadband Service Rankings (June 2005)" [37 KB GIF file]
38. The price of New Zealand's (128 kbps upstream) business broadband service would need to reduce by ~26% to rank in the top half of OECD performance and by ~53% to rank in the top quartile. The price of New Zealand's business broadband service option that is compliant with the definition would need to reduce by ~75% to rank in the top half of OECD performance and by ~85% to rank in the top quartile.
39. Business broadband access pricing is high relative to most other OECD countries and while the recent introduction of a slower upstream business service at a lower price by Telecom does improve relative performance to an extent, this is at the expense of upstream speed.
Residential Broadband Service Pricing
40. In the absence of an internationally agreed residential broadband benchmarking methodology, the Ministry received advice10 to use the following two service standard definitions as an interim basis for benchmarking such services. The two services reflect the known demand by residential users for an entry level broadband service (~ 68% of users) and for a higher speed and higher data capacity option (~ 32% of users).11
| Service parameter | Entry Level Residential | Standard Residential |
|---|
| Down load speed | 512 kbps | 1 Mbps |
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| Up load speed | 128 kbps | 256 kbps |
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| Data Volume | 1 GB per month | 5 GB per month |
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| IP addresses | 1 dynamic IP address | 1 dynamic IP address |
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| ISP fees | Included | Included |
|---|
41. The definitions were used to compile the following broadband service relative performance rankings. It should be noted that at this stage of the development of residential broadband services that a service option fully compliant with the chosen benchmark specification is not available in some countries and therefore it was necessary to use the nearest roughly equivalent available service instead.
OECD Country Entry Level Residential Business Broadband Service (June 2005)
→ Larger version of "OECD Country Entry Level Residential Business Broadband Service (June 2005)" [32 KB GIF file]
OECD Country Standard Residential Business Broadband Service (June 2005)
→ Larger version of "OECD Country Standard Residential Business Broadband Service (June 2005)" [31 KB GIF file]
42. Upstream speed issues aside, the pricing performance of residential broadband services is on a par with those in the top half of OECD relative performance.
Other Factors
43. Infrastructure based broadband service competition has developed in some areas. Residential Internet service is offered by cable TV networks in much of Wellington and parts of Christchurch. Wireless providers offering service to residential and small business users are establishing a foothold in Auckland, Wellington, Christchurch and Southland. However local topography limits coverage. A satellite-based broadband service option that focuses on remote rural communities is now available. The Ministry estimates that non-DSL based alternative infrastructure-based broadband services are available to up to 20% of households.
44. As at December 2004 the impact of bitstream unbundling on broadband uptake was limited as Telecom's voluntary commercial unbundled bitstream service had only just been made available, but is now gathering momentum. As at 30 June 2005 Telecom reported that it had ~30,000 wholesale DSL based broadband connections. The Commission is nearing completion of a determination of the terms and conditions for supply of a "regulated" unbundled bitstream service.
45. Broadband service pricing developments and uptake are mainly focused on services that have a maximum upstream speed of 128 kbps. Higher broadband service upstream speeds are available from Telecom at a price that reflects Telecom's decision to position it as a premium service, or from some alternative broadband service suppliers in some areas.12 In general, most mid-range DSL-based residential user broadband plans in other OECD countries provide an upstream speed capability of 512 kbps.13
46. Some countries' residential broadband services provide higher speed capability. For example, Yahoo Japan ADSL residential service14 features upstream speed capability starting from 960 kbps and downstream speed capability ranging from 8 to 50 Mbps.15 Such speeds can support the provision of quality VoIP services16 in conjunction with Internet access.
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