Telecommunications commissioner Dr Stephen Gale says mobile market competition indicators such as pricing, coverage and choice of mobile services were trending in a positive direction for consumers.
The Commerce Commission this morning released preliminary findings from its study into New Zealand’s mobile market, concluding the three established mobile network operators are performing well on most measures of quality.
"According to Opensignal, New Zealand currently ranks 8th out of 88 countries for 4G speed. Further, mobile service prices are generally lower than OECD averages, and consumers tell us they find it easy to compare plans and switch providers,” Gale said.
However, there is room for improvement in some areas.
"Prices for large data plans are noticeably higher than Australia and while mobile data use grew 69 per cent last year, reliable 4G coverage is not so widespread," Gale said.
"Information on performance measures like call dropping rates and coverage gaps is also hard to find.”
The study found that while consumers consider switching providers to be a reasonably simple process, there is some inertia. The Commission has begun further work to better understand the impact of this on consumers.
Gale said the key challenge for competition in the future is the allocation of spectrum.
“Spectrum is a key cost for the three network operators: Vodafone, Spark, and 2Degrees. Imbalances in spectrum holdings between operators – across all bands – can affect competition.
"Our view is that, in its design of future spectrum allocation processes, MBIE should have wholesale and retail competition matters at the forefront of decisions.”
Competition is emerging for network operators to sell wholesale services to allow virtual operators (MVNOs) such as Vocus and The Warehouse to sell mobile services to consumers, without having to build their own mobile network.
“We see no need to regulate at this stage but will keep an eye on the ability of new ‘virtual’ operators to access wholesale services. We expect more spectrum and consumer engagement will help this market to develop where it is commercially viable,” Gale said.
Vocus, however, said it was staggered that the Commerce Commission considers the wholesale mobile market as healthy and evidence of MVNO competition.
“We’ve been selling mobile plans through an MVNO for more than a decade now and have a grand total of 26,000 customers – and we are the largest MVNO in the country,” Vocus New Zealand chief executive Mark Callander said.
“We were expecting the Commission to realise that mobile operators have been paying mere lip service to mobile competition and to propose measures to increase competition and benefit New Zealand consumers.
"Today’s preliminary findings that the MVNO market is operating as it should is disgraceful.”
Callander said the fact that 99 per cent of the almost 5.5 million mobile connections in New Zealand are sold by three mobile giants is clear evidence that MVNOs aren’t working in New Zealand.
“Quite frankly they have missed the mark by a long, long way here,” Callander said.
In an emerging 5G world, he said, this finding will have a crippling effect as the mobile operators gain unfair advantage and an alternative network to replace fixed line services.
Vocus said it believed the Commerce Commission needed to regulate MVNO services so that MVNOs have a real opportunity to establish, gain scale and become competitive.
In contrast, Spark, Vodafone and 2degrees all released largely positive statements about the commission's preliminary findings.
2degrees said the commission's comments about future challenges around 5G spectrum were insightful.
“The difference in the spectrum held by the companies that have invested in national mobile infrastructure can affect the future competitiveness of the industry. It’s clear the Commission understands that and that imbalances should be addressed as 5G allocations take place,” chief of corporate affairs Mat Bolland said.
Telecommunications user group TUANZ said it had pushed strongly for a more holistic approach in the allocation of spectrum.
"We strongly believe that the national interest and the interest of users should be taken much more into consideration than a simple auction for the highest price," it said.
"This would include ensuring regional players are able to participate as well as allowing the possibility of additional new entrants into the market."
TUANZ said it was concerned this was not current government policy and it is a government department, MBIE, that controls allocation.
"We call on the relevant minister’s to take cognisance of the commission's view in this area and look to make changes to the upcoming allocation rounds, especially for the development of 5G networks."
TUANZ also said its members have indicated that while they are comfortable with the current range of telco providers, they would be keen to see further targeted MVNO options.
"In Australia we see one million connections being provided by MVNOs or wholesalers rather than the [network operators] themselves, and while this is only 3 per cent of the total market, they do represent over 29 per cent of the prepaid market," TUANZ said.
Overall the study found that consumers are more satisfied with mobile than with fixed line services, but there is still room to improve.
The Commission is inviting submissions on the preliminary findings by 28 June.