10. Telecommunications Services Industry: Economic Performance Indicators
10.1 International Comparisons
The OECD has established a methodology for comparing residential telephone service charges, business service charges, data circuit charges, cellular charges and a number of other services tariffs. The methodology is based on costing out a representative basket of component services and quantities, such as installation, access and call usage, in specified amounts, in each countries currency, and then converting to a common base via the use of 'purchasing power parity exchange rates (PPP) ' [PPP exchange rates are based on comparison across countries of the cost of a representative basket of goods and services - hence the term purchasing power parity.]. While there is scope to argue that the methodology may not properly be representative of users actual cost structures and that the use of PPP exchange rates is problematic, the method never-the-less allows direct comparisons of typical telecommunications services costs between countries.
OECD Basket Comparisons of Telephone Services Charges - August 1997
The following charts show the comparative ranking of residential and business telephone services tariffs for OECD countries, based on the OECD tariff basket model. New Zealand is ranked 12th in residential and 15th in business, out of 26 countries. It is possible that the OECD model does not adequately factor in discounted tariffs in New Zealand's case and to this extent may not be fully representative of consumer telephone service costs in New Zealand. Most other OECD countries either do not allow tariff discounting or severely limit the practice.
Fig 10.1 OECD Comparison of Residential Telephone Services Basket Tariffs in US$ PPP
Fig 10.2 OECD Comparison of Business Telephone Services Basket Tariffs in US$ PPP
10.2 OECD Basket of Mobile Service Tariff Comparisons February 1997
The following chart, fig 10.3, shows the comparative ranking of mobile telephone tariffs for OECD countries (17th out of 24 countries) based on the OECD mobile tariff basket model.
Fig 10.3 OECD Tariff Basket Comparison of Mobile Services in US$ PPP
10.3 OECD Basket of Leased Line Tariff Comparisons August 1997
The following chart, fig 10.4, shows the comparative ranking of leased line tariffs for OECD countries (20th out of 26 countries) based on the OECD leased circuit line combined services basket model.
Fig 10.4 OECD Tariff Basket Comparison of Leased Line Tariffs, comparative ranking
10.4 Department of Statistics Telecommunications Consumer Price Indexes
Over the last six years the major telecommunications services price reductions have been in the long distance call transport markets, which probably represent some 35% of Telecom's core telecommunications services business by revenue (this would include national and international calls, and the long distance calls component of enhanced services). There has also been a reduction in business access (rental) charges following the introduction of city access rentals in built up business areas.
10.5 Telecommunications Services Consumer Price Indexes
The Department of Statistics telecommunications services consumer price index (TS-CPI) changes (in real terms) are shown in the following graph, fig 10.5. Notable features are;
- the real price of toll calls has declined significantly. Since the entry of Clear Communications into the long distance call market in March 1991, real toll prices have reduced on average by some 5.6% per annum (pa);
- in the corresponding period the data indicates that the average real telephone access line rental and installation costs increased initially but declined progressively since late 1993;
(However, it should be noted that the real price of standard residential telephone service has not exceeded the November 1989 level, as required by Telecom's Kiwi Share obligations.) - the consumers real telecommunications services price index decreased on average by some 2.1% pa over the period;
The indexes are considered to be representative of the prices for basic telecommunications services in the residential telecommunications services markets.
Fig 10.5 CPI telecommunications services real changes relative to base period March 1991
10.6 Telecom Capital Expenditure Statistics
The graph below shows Telecom's real average investment per telephone access line per annum on a relative basis. The base year for comparison is the financial year ended March 1988.
Telecom substantially updated many aspects of its core network infrastructure and associated services in the early 1990s. In recent times Telecom has invested substantially in expansion of its cellular network, information systems to support improved services and reduce cost, internet service access and cable TV roll out.
Fig 10.6 Telecom Total Business Real Investment Trends per Access Line
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