BuddeBlog

Market growth

As in Australia and other developed markets, the financial crisis will most likely led to a drop in consumer demand and this will put pressure on telco service prices during 2009. New Zealand’s telco sector will actually be better placed than that of Australia. Despite a potentially weaker economy as a result of the financial crisis, it has already put in place the framework for the rollout of its national telco infrastructure, which will hopefully begin to give second tier telcos a more level playing field. A growth rate of between to 2% to 3% is predicted by BuddeComm for the telco services market in 2009, depending on the severity of the local economic downturn.

Competition

Competition will continue to grow in 2009 in the New Zealand market, although from a very low base due to enormous market power that Telecom has had up to operational separation in 2007. It has been a long process for Vodafone to integrate fixed line telco operator ihug, after an acquisition back in 2006, but finally Vodafone seems to be gaining traction in the fixed line market with DSLAM wholesale agreements in place by late 2008. Vodafone will push hard in 2009 to further its rollout and will start to significant market share from Telecom in both the fixed line calling and broadband market. It will rapidly become the main competitor of Telecom and will overtaking TelstraClear. Other players like Orcon will also continue with the DSLAM rollouts and make good progress, and this stimulate healthy ADSL2+ competition.

Mobile market

Vodafone has been able to take the competitive advantage over Telecom NZ in the mobile market and the gap between itself and Telecom in this sector will continue to widen. It will now be a long and difficult road for Telecom over the next few years if it is to now claw back market share from Vodafone, although its decision to go ahead with a more competitive 850Mhz 3G HSPA network rollout to be launched by mid 2009, will point it in the right direction.

Opportunities in the second tier market

Even Telecom New Zealand itself has admitted that already operational separation has begun to stimulate competition in New Zealand. Existing participants now have the opportunity to extend their activities, and additional competitors now have more opportunity to enter the market which has previously been dominated far too much by Telecom. Smaller competitors now have more attractive wholesale arrangements coming into place and this will put further pressure on prices, which have historically been far too high due to Telecom’s overwhelming market dominance.

But market consolidation will continue

Despite these opportunities, there is no doubt that a weakened economy due to the financial market will lead to further market consolidation, especially among the smaller fixed line telcos/ISPs. Also, TelstraClear, the number two fixed line operator in New Zealand, has been unable to gain any market traction, despite the opportunities that are opening up due to operational separation. It is quite likely that its owner across the Tasman, Telstra, will show increasingly less interest in the telco in a worsening financial crisis, as any potential investment funds earmarked for New Zealand, are diverted back to home soil.

Mobile broadband

Mobile broadband will become the hot topic in 2009. It still hasn’t hit the market to the same extent as can be seen in Australia, but with Telecom launching its HSPA network by mid 2009, healthy competition between Telecom and Vodafone should begin to develop. It will be interesting to see what dynamics this will create in the fixed broadband market.

The digital economy

Without proper infrastructure to support it, the digital economy remains all talk and no action. Media companies are ready and willing to make the first move but are unable to do so. The Digital Strategy 2.0 puts in place a good template to start with, but despite the new government’s promise, it will not be until at least another five years, before the necessary broadband infrastructure will be in place.

New Government

For our  analysis on this development see the BuddeBlog: Questions surround National NZ’s new ambitious broadband policy 

State of the Industry in New Zealand Roundtables with Paul Budde

Auckland - Monday 1^st December 2008 and Wellington - Tuesday 2^nd December 2008 

Theme: New Zealand Telco Market moving into 2009

 Cost: $495 per person (excluding GST) - this includes morning/afternoon coffee and lunch 

Booking:Online registration: http://www.budde.com.au/Conferences/Roundtables_with_Paul_Budde/Roundtables.aspx  or

Telephone:  02 4998 8144 or Email:  pbc@budde.com.au 

Cancellations/Refunds Policy Roundtables

We are happy to give a refund, provided we are notified no less than 24 hours before the event. 

Please notify of cancellations in writing to:  pbc@budde.com.au

This entry was posted on Tuesday, November 11th, 2008 at 2:23 pm and is filed under BuddeBlog. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.