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• 3. Key Statistics

• Telecommunications

• Archive

• NZ Telecoms Updates

• NZ Telecoms 1987-1998
• NZ Telecoms 1987-2000
• NZ Telecoms 1987-2001

• 3.1 Service Demand
• 3.2 Industry Operational Efficiency
• 3.3 International Comparisons Statistics
• 3.3.1 OECD Basket Comparisons of Residential and Business Telephone Service Charges
• 3.3.2 OECD Basket of Mobile Service Tariff Comparisons
• 3.4 New Zealand Telecommunications Consumer Price Indexes
• 3.5 Telecommunications Capital Expenditure Statistics
• 3.6 Interconnection
• 3.6.1 Brief Summary of Main Interconnection Charges in New Zealand
• Calls Passed Between Local Telephone Networks
• Calls Passed Between a Local Telephone Network and a Long Distance Call Provider (i.e. Toll Bypass)
• Calls Passed Between Mobile Networks
• Calls Passed Between a Mobile Network and a Fixed Network
• Set up Charge for Toll Bypass Preselection
• Local Number Portability Charges
• 3.6.2 List of Interconnect Agreements
• 3.7 Pricing and Tariffs
• 3.7.1 Local Telephone Service Pricing and Service Availability
• Business Telephone Service
• Residential Telephone Service
• 3.7.2 National (Toll) Call Pricing
• 3.7.3 Cellular Tariffs
• 3.7.4 International Tariffs
• 3.8 Telecom's Kiwi Share Obligations
• 3.9 Residential Telephone Service Quality Indicators

32. This section details statistical information on the New Zealand telecommunications services industry performance in tabular and graphical form. It is updated periodically when more up to date information is available. It is important to note that some data is not readily comparable with similar information from other countries and that some information is only available for one or a small number of carriers and may not be representative of the telecommunications services sector as a whole.

3.1 Service Demand

33. Summary data on total telephone line connections, cellular connections, national call minute volumes and international call minute volumes.

Public Switched Telephone Network Main Lines⁶

*estimated

Cellular Connections⁸

National Call Minute Volumes¹⁰

International Outward Call Minute Volumes¹¹

3.2 Industry Operational Efficiency

34. Telecom has progressively improved its efficiency measured in terms of lines per operating company employee and a range of other indicators (see below), as follows:

3.3 International Comparisons Statistics

35. 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 country's currency, and then converting to a common base via the use of "purchasing power parity exchange rates"¹³ (PPP). 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.

3.3.1 OECD Basket Comparisons of Residential and Business Telephone Service Charges

36. The following charts show the comparative ranking of residential and business telephone services tariffs for OECD countries, based on the standard OECD telephone service tariff basket models. According to the May 2001 results New Zealand is ranked 19thin residential and 23rd in business, out of 30 countries.

OECD Residential Telephone Service Basket Tariff Comparisons, PPP Exchange Rates, Excluding Taxes, May 2001, ~ 400 Minutes per Month

OECD Business Telephone Service Basket Tariff Comparisons - May 2001, PPP Exchange Rates, Excluding Tax

37. The standard OECD residential telephone service tariff basket model is representative of a user who makes about 400 call-minutes of local and national calls per month. However, New Zealand residential telephone service users' average per monthly total call use is understood to be around 700 call-minutes per month. In addition, Internet use is increasing rapidly. In August 2000 Telecom said that that about 12 billion minutes of line is tied up each year with Internet calls, which is in excess 500 minutes per access line. Clearly the standard OECD residential telephone service model (400 call-minutes) is not representative of average New Zealand residential telephone service user call demand.

38. A simple way of assessing New Zealand's relative performance at higher calling rates is to increase the use component of the standard OECD residential telephone service model. This has been done in the following graphical result where the use component has been doubled. This model result is representative of users with an average demand of about 800 call minutes per month. Using the May 2001 OECD results New Zealand's ranking using this approach was 12th out of the 30 OECD countries.

3.3.2 OECD Basket of Mobile Service Tariff Comparisons

39. The following chart shows the comparative ranking of mobile telephone tariffs for OECD countries based on the OECD/Taligen digital mobile tariff basket model. New Zealand is 25th out of 30 countries.

OECD/Taligen Mobile Basket Tariff Comparison - May 2001, PPP, Excluding Taxes (~250 Call-Minutes per Month)

3.4 New Zealand Telecommunications Consumer Price Indexes

40. Statistics New Zealand residential telephone services consumer price index changes (in real terms) are shown in the graph below. This index comprises a basket of the following services: residential local telephone service including an installation component, national and international calls.

41. Notable features are:

• Long distance call prices have declined significantly. Statistics New Zealand's residential telephone services consumer price index indicates that since the establishment of long distance calls competition in March 1991, real long distance call prices have reduced on average by about 10% per annum (pa).;
• The price of residential local telephone service and long distance calls declined on average by about 4% pa since March 1991;

Statistics New Zealand Real Residential Telephone Service Price Index: Percent Change from March 1991 Index

3.5 Telecommunications Capital Expenditure Statistics

42. 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.

43. 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 operational costs, Internet service access and cable TV service (now discontinued).

Trend in Telecom's Real Investment per Access Line per Annum Relative to March 1988 (CPI Used as the Deflator)

3.6 Interconnection

3.6.1 Brief Summary of Main Interconnection Charges in New Zealand

(Note: All charges are GST exclusive)

Calls Passed Between Local Telephone Networks

44. Telecom now has limited "bill and keep" type agreements with its main competitors for calls passed between local telephone networks (e.g. Telecom - Telstra Saturn). Generally, this means that so long as the number of calls between each local network are roughly in balance neither party charges the other for taking or receiving calls.

45. The term "call sink" has been introduced to deal with the problem of the one-way traffic to particular numbers. Under the recent interconnection agreements there is no charge for calls passed to call sinks and these calls are not counted in the balance calculations for billing.

Calls Passed Between a Local Telephone Network and a Long Distance Call Provider (i.e. Toll Bypass)

46. Typical toll bypass (e.g. Telecom - Clear - Telecom) charges consist of a per-call charge of 0.5 cents and then an origination and termination charge based on the area where the call originates and terminates respectively. There are three different types of Local Interconnect Calling Areas (LICAs) and, as outlined below, which are roughly analogous to major cities, secondary cities and outlying towns.:

Calls Passed Between Mobile Networks

47. There is a "bill and keep" type agreement between Telecom and Vodafone. This means that so long as the number of calls between each local network are roughly in balance neither party charges the other for taking or receiving calls.

Calls Passed Between a Mobile Network and a Fixed Network

48. This is fixed to mobile and mobile to fixed calls. These rates can vary but a typical rate (e.g. that negotiated with Telstra Saturn) is:

1. 29.5 cents per-minute for the first minute; and
2. a per-second charge, for each second of the Call after the first minute, of 1/60 of that per-minute charge;

Set up Charge for Toll Bypass Preselection

49. This facility allows customers to use an alternative provider for long distance calls without having to dial a prefix number before every toll call. Telecom charges $7.50 to set up non-code access.

Local Number Portability Charges

50. The charges are $17.50 per local number to set up call forwarding and 0.5 cents per minute for each call forwarded.

3.6.2 List of Interconnect Agreements

51. The following table lists the more significant telecommunications network interconnect agreements agreed since January 2000.

52. Most Telecom interconnect agreements have a comparability clause which in the event of a party to another Telecom interconnect agreement negotiating a lower rate for the same service with Telecom, would require Telecom to agree to include the new rate in other similar agreements containing the comparability clause.

53. Copies of Telecom's interconnection agreements are required to be made publicly available on Telecom's website under the Telecommunications (Information Disclosure) Regulations 1999. See:

http://www.telecom.co.nz/content/0,2502,200656-1553,00.html

54. Interconnection agreements between other operators are not required to be disclosed.

3.7 Pricing and Tariffs

55. This section provides examples of pricing for some key telecommunications services in New Zealand for illustrative purposes.

3.7.1 Local Telephone Service Pricing and Service Availability

Business Telephone Service

56. Telecom's standard rates are in the following table. Some business telecommunications services users can typically qualify for up to a 10% discount on business telephone line rentals and call usage charges under Telecom's premier plan.

57. Telstra Saturn offers business line rental for $599.40 per annum (exc GST).

Residential Telephone Service

58. Standard Telecom local residential telephone service is $36.34 per month (including GST). This includes unlimited local calls. Other options are available, including HomeLine Economy which has a monthly rental of $24.75 (including GST) plus a 20c charge for each local call. Calls longer than two hours are charged an additional 20c per two hours.

59. Telecom's Wellington and Christchurch residential customers have a lower monthly line rental of $29.95, with the option of adding two valued added services for a total monthly charge of $37.95 or three valued added services for $39.95.

60. Saturn Communications offers a local residential telephone service for $29.95 per month (includes unlimited local calls), available in Saturn's service areas in Wellington, the Kapiti Coast and some Christchurch suburbs. Saturn offers a $10 per month discount for subscriber who also take up their cable TV service (prices include GST at 12.5%).

3.7.2 National (Toll) Call Pricing

61. Many national call service providers offer various specials to customers on a regular basis. The rates below are only intended to give an indication of pricing for direct dial national calls for residential customers.

62. Under Telecom's Quick Call Plan, residential customers can pay a $5 a month flat fee (GST inclusive) to access the following per-minute rates.

63. Alternatively, Telecom residential direct dial national call customers can opt for $5 capped national calls at any time with the $5 Anytime Plan or $3 capped off-peak national calls at off-peak times only with the $3 Weekends & Weeknights Plan. Telstra Saturn offers an equivalent capped $3 national call rate for its residential customers in the off-peak period (GST inclusive). Toll by-pass operators such as Clear also offer similar or better deals for national calls.

64. Telecom also offers two flat-fee options which provide residential customers with unlimited free calling into a neighbouring local calling area or unlimited off-peak free calling into a more remote local calling area. The first, Favourite Place - Neighbouring Area, costs $19.95 a month. The second, Favourite Place - New Zealand, costs $29 a month (GST inclusive).

3.7.3 Cellular Tariffs

65. Telecom has a wide range of cellular plans for customers. The following table briefly summarises some of the residential plans (GST inclusive charges).

Note: See Telecom's website (http://www.telecom.co.nz) for more information.

66. Telecom charges 71c per minute (GST inclusive) for a residential telephone customer to call a Telecom cellular phone in New Zealand, or the off-peak call plan can be selected which gives an off peak rate of 99c/m and a peak rate of 49c/m. Most of the smaller carriers offer cheaper flat rates for making fixed to cellular calls.

67. Vodafone New Zealand also offers a range of cellular rental plans. The pre-pay Nights and Weekends option prices peak period calls at $1.39 a minute and off-peak calls at 49c/m while the pre-pay Anytime option is a flat 89c/m. A base post-pay option is priced at $20 per month, which includes 70 minutes of off-peak calls (7pm-7am weekdays, all weekends and public holidays) anywhere in New Zealand. Other calls cost 49c/m off-peak and $1.39 per minute peak. Various other plans are available -- refer to the Vodafone web site.

68. In New Zealand, cellular phone subscribers do not pay for calls received, only calls made.

3.7.4 International Tariffs

69. The international market is extremely competitive, with Telecom, Clear, Telstra Saturn, Global One, Worldxchange and Compass among the companies offering service. Tariffs should be requested from suppliers as prices change frequently and discounting and special deals are common, as companies react to the intense competition. Weekend international calls are currently (as at August 2001) capped at $4 to Australia and $8 to the US, UK, Canada and Ireland. Capped off-peak call rates to a range of other destination are available for $15 to $25.

3.8 Telecom's Kiwi Share Obligations

70. Since 1 November 1989, eight increases to residential rentals have been implemented. The telephone rentals (not including GST) are set out below.

71. The graph below shows that the real price of Telecom's standard residential telephone service rental (not including GST) has met the requirements of the Kiwi Share obligations, as the real price has not exceeded the level charged on 1 November 1989.

Telecom's Residential Telephone Service Rental Tariff, November 1989 Real $

3.9 Residential Telephone Service Quality Indicators

72. When Telecom was privatised in 1990 and the price of residential telephone service was capped by the Kiwi Share requirements, there was some concern that residential telephone service standards might not be maintained. To address this concern Telecom agreed in May 1990 to a request from the Minister of Consumer Affairs, to voluntarily publish indicators of the quality of the residential telephone service, on a half yearly basis, via media releases and in company reports.

73. Ten telephone service indicators were initially agreed upon which included service connection times, fault incidence, operator response times, SPC exchange availability, payphone availability and billing disputes. The objective was to provide residential customers with a clear understanding of Telecom's telephone service performance, and provide a safeguard against declining service standards.

74. In 1995 the Ministry of Consumer Affairs, in conjunction with Telecom, reviewed the adequacy of the quality of service indicators and a set of new indicators was agreed. The new set of indicators and recent performance follow:

⁶As at 31 March.

⁷Telecom changed measurement basis to exclude internal and test lines (about 65,000), payphones, centrex and ISDN lines.

⁸As at 31 March.

⁹BellSouth sold to Vodafone in November 1998.

¹⁰to 31 March, includes 0800, excludes fixed to cellular.

¹¹millions in year to 31 March.

¹²Excludes 1997 abnormal items, includes Pacific Star which was classified by Telecom as a discontinued business operation.

¹³PPP exchange rates are based on comparison across countries of the cost of a representative basket of consumer goods and services - hence the term purchasing power parity.

¹⁴Note: In August 1997, after obtaining the Government's agreement, Telecom reduced the standard residential telephone service option by $1.25 (GST inclusive) in exchange for the withdrawal of the free directory service component and the introduction of a $0.50 charge per residential user directory service inquiry.