Menu
​INSIGHT: Are local retail broadband prices set to drop further?

​INSIGHT: Are local retail broadband prices set to drop further?

Are there any changes that could further reduce retail broadband prices in New Zealand or Australia?

A few weeks back, media reports highlighted the fact that MyRepublic’s 2011 entry into Singapore resulted in a massive drop in broadband prices there, particularly at the 1Gbps level, where incumbent ISP StarHub was forced to reduce its offering from S$395 per month to S$69.90 in the span of just half a year.

Are there any such changes that could further reduce retail broadband prices in New Zealand or Australia? Nope.

There are certain immovable price points that the market simply cannot drive lower, namely UFB and NBN regulated price points.

That’s essentially the physical access circuits covered, but what about data charges? I really don’t see how these can drop any further, other than very marginal reductions from economies of scale gained by individual ISPs as they grow, should they choose to pass them along.

Proposed cables, such as Hawaiki, are less likely to go ahead if prices drop any further given that the return on investment gets less attractive, and at any rate, these projects have very real, and high, costs that have to be offset.

The Hawaiki cable, for example, is projected to cost $300 - $400 million.

The potential entry of the now largely forgotten Pacific Fibre, a would-be cable that aimed to connect New Zealand to the United States, prompted the existing Southern Cross Cable at the time into offering large price reductions for new terms, which both enabled ISPs to provide competitively priced unlimited data plans and spelled an end to Pacific Fibre’s chances of success.

These agreements are still in term and unlikely to alter for some time.

In New Zealand and Australia, the introduction of regulated pricing, as per the NBN and UFB programs, has resulted in every other carrier having to accept a massive drop in margins, and as that process of adaptation neared an end, streaming video on demand emerged as a genuine market force in our region.

Netflix in particular has enjoyed great success in its Australasian launch, and that success has seen residential ISPs handling overnight growth of up to 25 percent in network load, which adds overheads at a time of record low margins.

So, with existing low margins as they are, static costs, and increased overheads, it is hard to envisage a drop in broadband pricing in either country any time soon.

By Brendan Ritchie - CEO, DTS


Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Tags DTSinternetbroadband

Featured

Slideshows

Tight lines as Hooked on Lenovo catches up at Great Barrier Island

Tight lines as Hooked on Lenovo catches up at Great Barrier Island

​Ingram Micro’s Hooked on Lenovo incentive programme recently rewarded 28 of New Zealand's top performing resellers with a full-on fishing trip at Great Barrier Island for the third year​ in a row.

Tight lines as Hooked on Lenovo catches up at Great Barrier Island
Inside the AWS Summit in Sydney

Inside the AWS Summit in Sydney

As the dust settles on the 2017 AWS Summit in Sydney, ARN looks back an action packed two-day event, covering global keynote presentations, 80 breakout sessions on the latest technology solutions, and channel focused tracks involving local cloud stories and insights.

Inside the AWS Summit in Sydney
Channel tees off on the North Shore as Ingram Micro hosts annual Cure Kids Charity golf day

Channel tees off on the North Shore as Ingram Micro hosts annual Cure Kids Charity golf day

Ingram Micro hosted its third annual Cure Kids Charity Golf Tournament at the North Shore Golf Club in Auckland. In total, 131 resellers, vendors and Ingram Micro suppliers enjoyed a round of golf consisting of challenges on each of the 18 sponsored holes, with Team Philips taking out the top honours.

Channel tees off on the North Shore as Ingram Micro hosts annual Cure Kids Charity golf day
Show Comments