Media Release: TUANZ warns that the final copper pricing decision puts NZ out of step with rest of world

TUANZ warns that the Commerce Commission draft decision on wholesale copper charges this morning will likely lead to higher prices for users which puts New Zealand further out of step with the rest of the world.  Recent research by organisations such as the ITU already have New Zealand pricing comparing poorly.

The final price announced today adds a further $3.30 to the previous draft meaning that there’s been a steady increase from the Initial Pricing decision of $34.44 to this final wholesale price of $41.69.  Users had seen the benefit of initial lower prices flowing through as a result of the process and improved competition but now will likely face further increases in their monthly charges given this final price applies from tomorrow (16th December 2015).

“These prices will have a direct impact on users, and especially those users who are unable to take up UFB services.  These include the 20% of the population who live rurally, and who have no other fixed line options and will continue to rely on copper phone lines for the foreseeable future.” said Craig Young, CEO of TUANZ.

“This decision also lends weight to ensuring that we as a country get the current review of the Telecommunications Act right so that post 2020 we establish an internationally competitive business environment when it comes to the cost of connectivity” Mr Young stated.

TUANZ recognises that the Commerce Commission is an independent arbiter who must apply the law around these pricing processes as it stands, but are disappointed that the end users look to have lost out in this latest decision.  “We are though happy that the Commission has decided (in a split decision) to not apply any backdating to the pricing which is a positive outcome for users.” said Mr Young.

Mr Young is concerned that this may not be the end to the more than 2 years of uncertainty as there is the possibility that one of the telecommunications providers may choose to challenge the process in court given the material size of the latest price rise.  

“TUANZ has a vision of helping New Zealand move into the top 10 for business usage of digital technology (using the World Economic Forum Network Readiness Index) and while this decision makes this task a little harder, it is one we are still fully committed to” 

 

Fibre Readiness Survey - Speed is the Killer App

In 2010 a survey on business use of Ultra Fast Broadband (UFB) was conducted.  Earlier this year (2015) it was decided to survey the TUANZ membership once again and to invite the Greater East Tamaki Business Association (GETBA) to participate given the length of time UFB had been available in that area.  The survey was conducted online during the month of June 2015.

Over November, each week we will publish a post that covers off a key finding from the survey finishing up with our thoughts on the opportunities that we see arising from the survey results. We have also published the data to the Figure.NZ site and you can see the results here - note that at present that although the graph titles state that it is “TUANZ members”, the results include the GETBA results as well.   If you want to know more of the background and the response rate you can read that on our website here.

 

This week we look at the respondent's view that SPEED is one of the key drivers to take a fibre service.  In the survey we asked a series of questions that attempted to understand the key drivers for taking a fibre service  In some ways it was unsurprising that the key underlying reason was the reliable speed of connectivity.

However when asked what speed broadband they would like to buy in future (n= 142), none of the respondents who already have fibre or UFB (n 70) = selected VDSL or 30 Mbps/10Mbps plans and 42% of that group would purchase plans of 1Gbps or more. Of those without fibre (n = 72), it was interesting to note a general preference for lower speed plans, with the exception of the 1 Gbps plan (selected by 13%), which has been heavily marketed through Gigatown and other campaigns.

Of those respondents who had taken up UFB or fibre at their head office or single site, the majority (45%) were on plans of 100 Mbps symmetric or less. Almost 30% were on 1Gbps symmetric plans or more (including those on dark fibre). This appears relative to the greater sample of SME respondents than corporate.  Of the more than 42% (n=92) on copper broadband, around 23% reported they were on a VDSL connection. The same number didn’t know what speed their fibre connection was.

There are indications that opportunities lie in improving broadband speeds at branch offices. Nearly 45% of respondents (n= 83) had branch offices and although this sample diminished further when asked about the type of broadband connection they had (n=65), just under half were still on copper.

The trend to uncapped plans was confirmed with around a third of respondents no longer tied to a fixed amount of data.

 

Other Drivers of uptake:

 

Price (n=85) again proved to be a challenging question to survey, especially as many broadband plans are still bundled with telephony. Accordingly caution should be exercised when considering these results. When asked what monthly fee they were paying for broadband now, 77% of respondents said they were paying under $200 per month. The median price paid was $109. Unsurprisingly, SMEs and non-fibre users were the predominant type of businesses to answer this question. When compared with the 2010 survey results, it would appear businesses continue to be price sensitive. The similarity of the monthly UFB access fees to those for ADSL (copper) services was considered of greatest importance (74%) in encouraging UFB uptake by non-fibre respondents.

Other - The UFB benefits which were ranked second and third most important after access fees in encouraging uptake by non-fibre businesses were improved productivity (76%) and remote working (65%) respectively. All respondents considered cloud, remote working and voice-over-IP to be the three ICT services they would most consider investing in to leverage the benefits of UFB. These were similar to the responses given in 2010. The benefits respondents were least aware of in 2015 were reduced power costs and supply chain improvements.

Fibre Readiness Survey - Barriers to Uptake

In 2010 a survey on business use of Ultra Fast Broadband (UFB) was conducted.  Earlier this year (2015) it was decided to survey the TUANZ membership once again and to invite the Greater East Tamaki Business Association (GETBA) to participate given the length of time UFB had been available in that area.  The survey was conducted online during the month of June 2015.

Over November, each week we will publish a post that covers off a key finding from the survey finishing up with our thoughts on the opportunities that we see arising from the survey results. We have also published the data to the Figure.NZ site and you can see the results here - note that at present that although the graph titles state that it is “TUANZ members”, the results include the GETBA results as well.   If you want to know more of the background and the response rate you can read that on our website here.

This week we look at what barriers to uptake that became apparent from the responses in the survey.  The first barrier is simply the apparent lack of awareness that a fibre service is available.

It is interesting to note that in 2015, some 39% of all respondents without fibre (n=98) didn’t know whether UFB was available in their area.  When added to those who thought UFB wasn’t available, that figure grew to almost 60% of those without fibre. This data was gathered when the rollout to businesses was some 93% complete.  The TUANZ results are in line with those from the Statistics New Zealand Business Operations Survey 2014 supplied to Chorus which found that 48% of respondents cited lack of availability of fibre as the greatest barrier to uptake.  Note that market research on UFB has generally shown high awareness of what UFB is, which should not be confused with where it is available.

The second apparent barrier was the perceived price of a fibre service.  When all respondents were asked what speed broadband they would like to buy in future (n= 142), it is interesting to look at the impact of UFB prices, now that they are in market. Non-fibre respondents (n= 72) were more likely to buy lower speed, lower cost plans than those already on UFB or fibre.  

Other barriers to takeup among non-fibre respondents were the one off installation cost, the monthly access cost of the new service and the cost to break an existing contract or potential risk to business interruption.  There were perceived as the four greatest barriers to connecting, being considered a “high” or “very high” barrier by 56%, 44% and 34% equal respectively. Of least concern to this group was the need to gain a neighbour or building owners’ consent to connect and potential hardware, software or systems integration costs.

When asked what businesses would like to know more about, respondents (n= 84) had a strong or great need for information on performance guarantees (56%), UFB rollout timeframes (49%) and speeds and bandwidth (47%).  Non-fibre users were more than twice as likely as those already with UFB/fibre to want to find out more about applying the benefits of UFB to their business model and products, services and solutions which run over UFB, however this was off a low base and should be considered indicative only.  The survey in 2010 demonstrated a real lack of interest in these aspects of UFB by non-fibre/UFB users, but given the sample size in 2015 (n =~40) it is hard to draw an accurate conclusion about the extent to which this has changed.

When asked who they would trust to advise them on UFB (n = 121), over half the respondents chose their IT provider (50.4%) to assist, followed by their retail service provider (47%) or TUANZ (40%).   Asked if they would undertake training to make the most of UFB, (n = 120) more than half the respondents (52%) were not willing to do so. Given this, the sample size of respondents to further questions about training was not sufficient to draw meaningful conclusions.  

 

 

 

Fibre Readiness Survey - SME's yet to seize the opportunity

In 2010 a survey on business use of Ultra Fast Broadband (UFB) was conducted by TUANZ.  Earlier this year (2015) it was decided to survey the TUANZ membership once again and to invite the Greater East Tamaki Business Association (GETBA) to participate given the length of time UFB had been available in that area.  The survey was conducted online during the month of June 2015.

Over November, each week we will publish a post that covers off a key finding from the survey finishing up with our thoughts on the opportunities that we see arising from the survey results. We have also published the data to the Figure.NZ site and you can see the results here - note that at present that although the graph titles state that it is “TUANZ members”, the results include the GETBA results as well.   If you want to know more of the background and the response rate you can read that on our website here.

This week we look at the uptake amongst SME’s in the survey and conclude that they are yet to seize the opportunities available to them.

In 2010 around 64% of respondents said they already had at least one fibre service. This was not surprising given that fibre optic services had already been deployed in many CBD locations and the majority of respondents were corporates. For clarity on the difference - fibre laid before the UFB initiative was not built as part of an open access network available for all retail service providers to offer services over, and therefore more costly. It was largely made up of a series of bespoke, point-to-point connections from the exchange directly into the corporate office.

Back in 2010, of all respondents asked about their likelihood to connect to UFB within a year of it being available, 82% said they were “likely to”, “highly likely to” or “definitely will” connect. This could only be considered an indicator of future behaviour as no retail costs were provided then.

By 2015 49.5% of all respondents had actually taken up UFB or fibre at their head office or single site. More than 20% of those with UFB or fibre had pre-existing fibre and more than 65% were corporates.  Drilling down, the share of those who had not taken up UFB was 42.3% and of them, 60% were SME.

The message from several studies in recent years, that there are untapped productivity and efficiency gains available to SMEs with a strong internet presence, isn’t yet changing behaviour.  

Cloud applications, remote working and voice-over-IP were the areas most businesses said they would consider investing in to use UFB. This was in line with the feedback in 2010, although collaborative tools ranked more highly then. Improved productivity, remote working and improved video conferencing were the most well known benefits of UFB.

Less than half the total respondents answered questions about the need for further information. Interestingly, the information most sought after was simple, high level and readily available, such as performance guarantees, UFB rollout timeframes, and speeds and bandwidth.

Looking forward, the survey results suggest there remains a strong need for wholesale and retail service providers to improve awareness of UFB availability, especially among SMEs.