NZ Market Overview

New Zealand's broadband market is poised on the brink of strong growth, with broadband connections increasing 79% to 1.5 million subscribers by 2012, according to IDC's New Zealand telecommunications forecasts.

New Zealand's broadband penetration, based on connections per 100 inhabitants, will double to over 34 from 16.5 in June 07, driven by strong growth in copper-based xDSL technologies. This will improve our OECD broadband penetration to where leading broadband markets are today, but we do not estimate it will significantly improve our ranking given continued growth and saturation in leading markets over the next five years.

From 2008, the market will be dynamic, more customer focused, but also extremely volatile. The nature of competitive investment, the effectiveness of the new regulatory framework, and the full impact of Telecom's operational separation and nextgeneration network (NGN) strategy creates complex interrelationships and the potential for very diverse outcomes.

IDC is assuming steady rather than stellar competitive growth. We anticipate the emergence of new full-service competitors that provide a bundle of voice, broadband and mobile services eroding telecom's market share, but Telecom will continue to be the most powerful market player unless there is a truly disruptive change through acquisition or consolidation amongst the market leaders. Competitive infrastructure through unbundled copper local loop (UCLL) will be limited to central city sites and urban areas, although we anticipate new forms of industry collaboration and public/private partnership (PPP) funding models that will drive municipal fibre and rural investment.

IDC forecasts include:

• Total broadband revenue growth of 58% to NZ$782 million, of which NZ$577 million will be xDSL technologies, driven by the top line increase in subscriber numbers.
  
• Steady decline in New Zealand's traditional public switched telephone network (PSTN) voice market, with an annual reduction of 5–7% in PSTN lines, and a 21% decline in total calling revenue, to NZ$1.323 billion by 2012. This will be driven by growth in voice over broadband or 'IP' services (VoIP), migration to next-generation technologies and mobile substitution.
  
• Total mobile penetration – which shows the number of active connections across the population - increasing to 111% over the forecast period. Total subscriber numbers will grow 14% to 4.9 million active connections. There will be significant growth in wideband code division multiple access (WCDMA) services in operation, more commonly known as third generation mobile (3G). This will lead to an increase in 3G connections from 3% of today's total market share to 55% by 2012, driven strongly in the latter part by Telecom's migration from its legacy CDMA network prior to potential closure. However, the battle for mobile power will remain firmly between Telecom and Vodafone, with new entrants and mobile virtual network operators (MVNOs) carving niche roles.

Source:
  IDC NZ Market 2008-2012 Analysis and Forecast