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2. Annual Update: Key Industry Events from 1998


This Document is Archived


New Zealand Telecommunications 1987-2001

Resources and Networks Branch
[ Last Updated 18 November 2005 ]


January 1998

  • Discussion Paper on penalties, remedies and court processes under the Commerce Act 1986 is released by Ministry of Commerce. The paper proposes that increased penalties and remedies apply for anti-competitive behaviour.
  • Telephone number portability is introduced into New Zealand, by Telecom New Zealand, Clear Communications and Telstra New Zealand's networks, using call forwarding.

February 1998

  • Telecom announces an ADSL1 trial (using its existing twisted copper network to deliver high speed data and video services) in Wellington. This was followed by an announcement in October of its intention to roll out commercial service of xDSL technologies in 1999.

April 1998

  • Clear announces it will start trailing LMDS2 as a mechanism for wireless local loop service (for voice and data) to business customers in main centres from September.

May 1998

  • Saturn launches a residential local telephony service in the Hutt Valley, with a rate of NZ$29.95 per month compared to Telecom's NZ$35.66. This is the first residential local wireline competition in New Zealand. Saturn subsequently expanded to part of the Kapiti Coast and some of Wellington's western suburbs by the end of December. Saturn is continuing to expand its residential telephony service to all of Kapiti and Wellington city and suburbs. It intends to complete its investment of NZ$230 million in the Wellington area by the end of 1999.

June 1998

  • Telecom announces the closure of its First Media cable TV service at the end of July. This followed the decision in November 1997 to stop the rollout of the hybrid fibre coax (HFC) network at 68,000 homes passed (in Auckland and Wellington). Telecom said First Media was closed due to the poor take-up rate of potential customers (approximately 3%) and the decision to concentrate on trialling xDSL technologies for delivery of high speed data to residential customers. Telecom is still evaluating ways to utilise its HFC network, possibly to deliver high speed data services to residential customers.
  • The Treasurer releases a Strategic Overview Paper on the telecommunications industry prepared by Treasury and the Ministry of Commerce. The paper highlighted key reviews underway of numbering administration and portability issues, penalties and remedies under the Commerce Act and the Telecommunication (Disclosure) Regulations.

July 1998

  • The Commerce Commission releases findings on Telecom's competitive response to Saturn's entry (a $5 loyalty discount). The Commission considered that Telecom was pricing above marginal cost. Regional pricing per se, is not necessarily a breach.
  • WorldxChange launches a partnership with retail chain Deka to sell its discounted national and international toll services to residential customers. As of September, WorldxChange claims 6000 customers.
  • In response to other service providers price reductions, Telecom reduces international toll prices by an average of 20%, with reductions on some routes and times by over 50%.

August 1998

  • NetTel launches service as a reseller for Telstra, offering national and international service using calling cards, targeting niche residential and business customers.
  • British Telecom announces that it is increasing its stake in Clear to 50% taking over MCI's 25% shareholding.
  • BellSouth (USA) and Singapore Technologies Ventures announce sale of BellSouth New Zealand to the Vodafone Group for NZ$750 million
  • The Ministry of Commerce releases a discussion paper on options for telecommunications numbering policy. The Minister of Communications sets a tight deadline, 30 November, for the industry to reach agreement on satisfactory voluntary arrangements for numbering administration and resolving longer term number portability issues.

September 1998

  • Superway announces it is commencing a roll out of a cable network in the North Shore of Auckland with the intention of targeting business users at first, supporting high-speed data, telephony and cable television.

November 1998

  • The Ministry of Commerce releases a Telecommunications (Disclosure) Regulations Discussion Paper which proposes that Telecom be required to produce separate financial statements for its local loop and its other telecommunications businesses and to undertake a full economic costing of the Kiwi Share Obligations.
  • Iridium launches first global mobile personal communications by satellite (GMPCS3) service worldwide using handsets, offering service to all parts of the globe.

December 1998

  • Telecom, Vodafone, Telstra, Newcall and Teamtalk agree to arrangements to resolve telecommunications numbering issues. The Number Administration Deed (NAD) provides for: independent administration of each party's telecommunications numbering resources; a process for determining New Zealand's ongoing number portability requirements; and binding arbitration to efficiently resolve any disputes arising between parties with reference to agreed numbering principles to guide the arbitrator. Some parties refuse to sign up to the agreement in its present form.
  • The Government issues statement of economic policy to Commerce Commission on telecommunications numbering. The Ministers of Communications and Enterprise and Commerce state that the Commerce Commission is the appropriate forum to determine whether the deed agreed between telecommunications companies raise any competition concerns.
  • The Government announces that the Ministry of Commerce will auction 32 management rights and approximately 1600 licences in the 2 GHz band of radio spectrum, which spans the frequencies 1710-2300 MHz. The rights to be auctioned are expected to support a range of technologies associated with the next generation of digital cellular mobile services, known as PCS4.

May 1999

  • Xtra, the country's largest ISP (Internet services provider), starts offering flat-rate access to the Internet for $39.95 a month after Clear announced that it intended to do the same. Ihug has been offering flat-rate access for several years.
  • Telecom introduces ongoing $5 capped weekend calls to Australia and $10 capped weekend calls to the United Kingdom, Ireland, the United States, and Canada.
  • The Commerce Commission authorises the Number Administration Deed. The parties to the Deed had applied to the Commerce Commission for authorisation because it made access to numbering resources dependent on signing up to the Deed. The Commission concluded that the Deed did not have the effect of lessening competition, and that its public benefit meant that it should be allowed despite the exclusionary provision relating to access to numbers.

June 1999

  • Vodafone announces it will spend $200 million over the next two years to upgrade its cellphone network to cope with increased demand.
  • Telecom launches its JetStream fast Internet service. JetStream uses RADSL (Rate Adaptive Asymmetric Digital Subscriber Line) technology to allow large amounts of data to be sent down a normal telephone line at high speed, while still allowing the line to be used for normal telephone conversations. The cheapest JetStream service allows 600 Mb of data a month to be downloaded (equivalent to about 220 hours online) for $89 (including GST and ISP charges). Installation and modem costs are extra.
  • Clear announces that a $5.5 million bank of computers, referred to as a switch, went live in Christchurch. The computers are the central switching point for the toll, data, and local traffic to and from all of CLEAR's South Island customers. Previously, this traffic was switched through the company's Wellington facility.
  • BT increases its shareholding in CLEAR Communications to 100 per cent.

August 1999

  • Saturn launches a high-speed Internet service for its residential customers. The new service allows a personal computer user Internet access over Saturn's cable network through a cable-modem and an ethernet card in the PC.
  • Telecom announces plans to replace its mobile telephone network with new cdmaOne digital technology. The CDMA (Code Division Multiple Access) technology will provide a high quality digital cellular service with high capacity, high-speed mobile data transmission. The new network will not be launched until 2001.
  • Ihug launches calling cards allowing casual use of its cheap toll call service that runs voice traffic over data circuits using voice-over-internet protocol.
  • The Government announces its intended changes to the telecommunications information disclosure regime. A key change is a requirement for Telecom to calculate and disclose the net economic cost of complying with Kiwi Share obligations. Another major change is a requirement for Telecom to publish six monthly financial statements that split Telecom's operations into a local loop business and other telecommunications services. The changes are to take effect from 1 January 2000, with the first financial statements due on 30 September 2000.

September 1999

  • The $2 billion Southern Cross cable, which is 50% owned by Telecom, lands on Takapuna beach in Auckland, completing its trans-Tasman stretch. Once it is entirely completed, the 29,000 km Southern Cross cable will be New Zealand's and Australia's highest capacity route to North America.
  • The Government announces it is satisfied with Telecom's 0867 Internet initiative so long as 0867 is not charged for and service quality is maintained. From 1 November, Telecom plan to introduce a 2c a minute Internet Dial- up Charge (IDC) for Internet access for residential line customers after 10 hours of free use each month.5 The charge will not apply to Telecom customers who use 0867, 0873 IPNet, or 0800 toll free numbers to dial-up their ISP.

November 1999

  • Elizabeth Longworth is appointed chair to the Number Administration Deed Management Committee.

January 2000

  • Vodafone and Telecom released figures showing huge growth in the number of mobile phone connections in the last quarter of 1999. Vodafone's connections grew by 35 percent in the three months to 31 December 1999 to reach 397,000 while Telecom's mobile connections grew by 13 percent over the quarter to reach 858,000.

February 2000

  • The new Government announces a Ministerial Inquiry into Telecommunications. The Inquiry is to be run by a three-person team chaired by Hugh Fletcher, the former Chief Executive of Fletcher Challenge. The Inquiry is to present a final report to Government by the end of September. The Inquiry is established to assess the regulatory regime for telecommunications, and recommend any changes.
  • Vodafone and Clear announce an alliance that enables Clear to offer Vodafone mobile services to its customers.
  • Austar United Communications and Telstra Corporation announce the merger of their New Zealand operations, Saturn Communications and Telstra New Zealand to form a 50:50 joint venture. The new company will be called Telstra Saturn. Telstra and Austar announce their commitment to invest more than NZ $1 billion over five years to build a broadband network.
  • Compass Communications launches Freenet, New Zealand's first free Internet Services Provider.

March 2000

  • The Ministry of Economic Development commissions Ovum Pty Ltd to assess the net benefits of introducing local loop unbundling in New Zealand. The Ovum Report finds there is no compelling economic case for local loop unbundling in New Zealand, as the potential benefits are estimated to be approximately equal to the likely costs.

April 2000

  • i4free is launched. It resides on Clear's network and will provide free nation-wide Internet access, email, newsgroup, search facilities and basic services to home users.
  • Telecom applies call controls on i4free traffic because it argues that the rise in i4free Internet traffic is compromising the Airedale Exchange. The High Court grants an interim injunction allowing the continued operation of i4free service.
  • Telstra Saturn purchases ISP, Paradise Net Limited. Paradise Net Ltd has 33,000 subscribers throughout New Zealand. Most subscribers are residential.
  • Telstra Saturn signs a contract with Ericsson Communications to install a new broadband submarine cable between Auckland, Wellington and Christchurch. The cable is expected to be operating before the end of 2001.
  • The Government announces that the Commerce Act 1986 will be strengthened. As part of the changes, the phrase "dominance" in s36 of the Act will be replaced with the lower threshold of "a substantial degree of power in a market" and the word "use" to be replaced with "take advantage of".

May 2000

  • Telecom and Clear reach an agreement on the 0867 Internet number range. Internet users utilising Clear's ISP will not pay a two-cent per minute charge for non-0867 Internet calls. In return, Clear would encourage customers to utilise the 0867 service. The agreement allows Clear and Telecom breathing space in which to renegotiate their interconnection agreement, which expires at the end of 2000.
  • Telecom and Vodafone announce that they have renegotiated and renewed their interconnection agreement. Included in the terms of the agreement is a 10% reduction (to 31.5c per minute) in the interconnection price of delivering calls to mobile phones on the two networks.
  • Telecom announces $38million plans to establish a new submarine cable between North and South Island. Telecom appoints Siemens as principal contractor for the project. The cable will use DWDM (Dense Wavelength Division Multiplexing) technology.

June 2000

  • Telstra Saturn and ERG Group sign a contract to build an integrated telecommunications network in Christchurch. The ERG deal is part of Telstra Saturn's $200 million investment to provide voice, data, Internet and cable TV services to businesses and residential markets in the city.

July 2000

  • Telstra Saturn and Telecom announce a series of agreements on interconnection, wholesale services, a 0867 Internet traffic agreement and a pole-sharing agreement. A key feature of this agreement is the introduction of a form of "bill and keep" arrangement for local interconnection.

August 2000

  • Clear announces it will spend $14million to upgrade its North Island network by employing dense wavelength division multiplexing (DWDM) to increase capacity of the cable network.
  • The Commerce Commission commences court action against Telecom alleging that Telecom contravened section 36 of the Commerce Act in introducing its 0867 package. The Commission is alleging that in introducing 0867 Telecom sought to prevent or deter competitive conduct by other telecommunications network operators and Internet service providers.

September 2000

  • Clear launches Clear Wireless to provide high-speed Internet access for businesses. The service will provide speeds up to 2Mbps for sending and receiving information via the Internet.
  • Clear, announces a new flat-rate access to Internet for $24.95 a month after Xtra announced that it intended to do the same. Ihug has been offering this new flat rate deal for several months.
  • Telecom announces the annualised cost of the Kiwi Share Obligation was $167 million under the Government mandated methodology prescribed in the Telecommunications (Information Disclosure) Regulations 1999.

October 2000

  • The Minister of Communications releases the final report from the Ministerial Inquiry into Telecommunications. The Inquiry recommends:
    • a single regulatory framework covering all electronic communication services with the establishment of the Electronic Communications Commissioner.
    • the designation (enabling pricing and access obligations to be set) of interconnection with Telecom's fixed wire network, including data tail access and wholesaling of retail services by Telecom.
    • the specification (enabling access obligations to be set) of interconnection between all networks, carrier pre-selection from all networks, wholesaling of 2½G mobile services, roaming between compatible 2½G mobile networks, co-location of mobile cell sites and Sky Television's conditional access system.
    • that access objectives should be applied to assess whether specification or designation of a service is desirable. The access objectives are to promote the long-term interests of existing and potential end users of electronic communications services by any or all of the following:
      • facilitating efficient competition in markets for electronic communications services;
      • promoting any-to-any connectivity to the extent that it is efficient; and
      • encouraging the efficient use of, and the efficient investment in, the infrastructure by which electronic communications services are provided.
  • Telecom and Clear announce a Relationship Package. The Package incorporates agreements on interconnection and wholesale-related matters and commits both sides to a more open and commercial relationship.
  • Vodafone announces that its customers send between 500,000 to one million text messages every day.
  • Vodafone and Telstra Saturn announce an alliance allowing the two companies to work together to bridge the technology gaps and develop new, seamless services. The alliance will enable Telstra Saturn to deliver broadband to its customers over a wider range of access mediums by extending broadband services to reach Vodafone mobile users.

November 2000

  • Telstra Saturn and Television New Zealand (TVNZ) sign a memorandum of understanding that will allow TVNZ to provide digital free to air television service and Telstra Saturn to provide a nation-wide subscription service as part of bundle of convergence services.
  • First commercial traffic starts to flow across Telecom's Southern Cross cable. The cable will mean a 120 fold increase in bandwidth capacity for New Zealand.
  • The Government announces changes to the Consumer Guarantees Act 1993 to confirm the coverage of utilities (including telecommunications).

December 2000

  • The Government announces its response to the Ministerial Inquiry into Telecommunications. The objective of the new regime is to ensure delivery of cost efficient, timely, and innovative telecommunications services on an ongoing, fair and equitable basis to all existing and potential users. The key features of the new regime are:
    • the establishment of a Telecommunications Commissioner in the Commerce Commission with the powers to resolve disputes between industry players over key services;
    • the immediate designation (enabling pricing and access obligations to be set) of:
      • interconnection with Telecom's fixed telephone network;
      • wholesaling of Telecom's fixed network services; and
      • number portability, including 0800 number portability;
    • the deferred specification of fixed to mobile carrier pre-selection on Telecom's network;
    • the provision for the Telecommunications Commissioner to make recommendations to the Minister of Communications for regulation of other services in the future; and
    • the upgrade of the Kiwi Share to provide data capability to virtually all New Zealanders (9.6kbps to 99% of residential lines and 14.4kbps to 95% of residential lines)
    • plans to establish an Information Society Initiative to facilitate a partnership between Government, industry and local communities in relation to measures that will promote the information economy in New Zealand. This includes considering issues relating to access to bandwidth in New Zealand.
  • Clear announces Zfree (the largest free Internet provider) has reached 250,000 registered users. Clear suspends new registration to ensure Zfree's quality is maintained with the network capacity currently available. Clear enters new interconnection agreement with Telecom which effectively stops / places a cap on interconnection payments where interconnection between the two networks is substantially out of balance.
  • Ihug launches Ultra Lite, a new high-speed service costing $49.95 per month. Ultra Lite will deliver 256kbps to residential customers in selected regions.

January 2001

  • The Government announces the conclusion of the 2GHz spectrum auction. Bidding for 2GHz spectrum closed at $133 million. The spectrum auction observed the entry of new players in the market. Second generation spectrum has been purchased by Telecom, Clear, Vodafone, Telstra Saturn and Northelia, and third generation spectrum by Telecom, Clear, Vodafone and Telstra Saturn.
  • Ihug announces plans to enhance its high-speed service utilising two-way high-speed "always on" wireless service that will allow upstream transfers of up to 512kbps and downspeed connection of up to 2mbps. The "always on" service will deliver greater choice to consumers by allowing them to bypass their local loop telephone provider.
  • Telecom announces a new monthly residential phone line rental for its Wellington and Christchurch customers of $29.95;or monthly residential line rental plus a choice of two value added service for $37.95; or monthly residential line rental plus three value added services for $39.95.

February 2001

  • Telecom and Sky Television agree to launch nationally a range of packages that bundle telephone and digital television to Sky Television and Telecom customers. This is after a 1 year trial that offered to 6,500 residential customers, mostly in Wellington and Christchurch. Telecom and Sky Television announce that they are driving towards integration between telephone, the Internet and television.

March 2001

  • Telstra Saturn switches on the first stage of its residential cable network in Christchurch, which passes around 8,000 homes. Christchurch is the company's next step into the residential market following Wellington.

May 2001

  • The process of recruiting a Telecommunications Commissioner commences with advertisements for the position appearing in local and international publications.
  • The Telecommunications Bill is introduced to Parliament. This Bill contains the legislation to implement the new telecommunications regulatory regime proposed by the Government in response to the recommendations of the Ministerial Inquiry into Telecommunications.

July 2001

  • Telecom launches its nationwide CDMA mobile phone network. CDMA mobile technology offers 10 times the capacity of analogue and three to four times that of other digital platforms.
  • Vodafone New Zealand reaches its millionth mobile phone customer, bringing New Zealand's total mobile phone users to around 2.25 million and mobile penetration to around 60 percent of the population.

August 2001

  • Telecom reaches a commercial agreement with Clear Communications that will enable Clear to offer non-code access for land to mobile calls made from Telecom fixed lines.

1 Asymmetric Digital Subscriber Line. This technology digitises signals over conventional twisted copper wire line, enabling high speed data service to be offered along the same lines as conventional switched telephony.

2Local Multipoint Distribution System. A super high frequency wireless technology which is cellular based, used to deliver local telephony service and high speed data.

3Global Mobile Personal Communications by Satellite. This term is generally used to describe the new generation of worldwide satellite based personal mobile telephony services. Globalstar and ICO are expected to launch similar services to Iridium in the next 2 years.

4Personal Communications Services. This refers primarily to localised mobile phone services, servicing small areas, such as factories or a residential area. It is also now used to refer to 3rd generation mobile services or IMT-2000 (International Mobile Telecommunications), which is designed to combine GMPCS, cellular mobile and PCS services into a seamless mobile telecommunications service.

5The introduction of the 2c a minute charge was delayed by at least a month for the customers of many ISPs. This was to allow all the ISPs to be connected to the new number range.


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