1. Introduction
New Zealand's telecommunications services regulatory policy was comprehensively reformed over the period 1987-89 in order to improve the industry's economic performance and contribution to welfare. Previously, the New Zealand Post Office had a statutory monopoly in the provision of public telecommunications services.
On 1 April 1987, Telecom Corporation of New Zealand Limited (Telecom) was formed, and the regulatory and policy advice functions were transferred to the Department of Trade and Industry (later to become the Ministry of Commerce). Over the period 1 October 1987 - 1 April 1989 the supply of telecommunications customer premises equipment was progressively deregulated. From 1 April 1989 all legal restrictions on entry into telecommunications service markets in New Zealand were removed. In September 1990 Telecom was privatised.
Competition in telecommunications services developed progressively from 1991 following conclusion of the first interconnection agreement. A complete list of significant interconnect agreements is presented later in this report.
New Zealand has one of the most liberalised and modern telecommunications markets. Users are benefiting from lower prices and the introduction of new services. This paper outlines significant market developments since reform and the resulting benefits to New Zealand.
Key Benefits of Telecommunications Deregulation since 1991:
- Clear Communications has established itself as a long distance (national and international) calls provider (entered service in May 1991) and currently has a long distance calls market share of about 18%;
- BellSouth has established its cellular service (commenced August 1993) and now has 91% population coverage and a cellular customer market share of some 13%;
- Clear Communications is now providing business telephone service in Auckland and Wellington central business districts (CBDs). Service provision commenced in early 1996;
- vigorous competition has developed in customer premises equipment, leased circuit services, data services and fleet mobile;
- advanced services are available, such as ISDN, frame relay, call diversion, interactive voice response systems, audio and video conference services; toll free and 0900 services; call minder, and an initial PCS offering;
- capital investment in telecommunications by Telecom, BellSouth and Clear since 1987 exceeds $6,600m;
- quality of service has improved. New telephone connections are typically completed within a few days of application, fault response improved and customer inquiry answering services have greatly improved. However, fault clearance performance has marginally deteriorated in recent years;
- prices have reduced significantly since early 1991, some examples being:
- residential national call prices as measured by the Department of Statistics CPI for toll calls, have declined 34% in real terms [ Price including the effect of inflation.] , an average of about 7.1 % per annum;
- business national call prices have reduced by more than the residential price index decline as businesses typically obtain substantial volume discounts. Bulk discounts of up to 39% off the base national call retail tariff have been reported while 18% is probably the typical average business volume discount;
- $5 "call as long as you want" weekends have been introduced and have now been extended to week nights;
- international call peak period prices have reduced by in excess of 30% in real terms to the major destinations. Off peak prices have reduced by more than 46%, with larger reductions for long duration calls;
- city access business telephone line rentals have reduced by in excess of 24% in real terms;
- telecommunications service is now largely provided by the private sector.
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