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A new market research report for the telecoms sector in New Zealand has been released on the website companiesandmarkets.com. The title for the publication is “2009 New Zealand – Telecoms and Overview & Analysis” and the executive summary can be found here.
The report provides a great deal of insight into the telecoms sector in New Zealand. It finds that the total New Zealand market grew by 2% to $7.1 billion for the year up to June 2008. BuddeComm predicts that the total New Zealand telco market will grow around 2.3% in 2008/09 and 3.5% in 2009/10, although these growth rates could be up to 1% lower, depending on the severity of the global financial crisis.
New Zealand and the United Kingdom are the only countries in the world that have enacted functional separation as a regulatory tool. Citing many of the same reasons given on this site, the report states emphatically that implementation of this regulatory measure has benefitted users in New Zealand tremendously:
Even Telecom New Zealand has itself admitted that functional separation has already 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.
In Fiji, it’s FINTEL’s dominance over the international gateway that most closely resembles our New Zealand counterparts. The first stages of sharing under liberalisation are being implemented. However, until the prescription of functional separation is handed down from regulators, we will not reap the kind of benefit that New Zealand is experiencing now. Interestingly, even the incumbent operator in NZ acknowledges that the regulatory measure has been a positive development. How long before we see these steps being taken in Fiji?
An earlier post outlined how regulators in Australia would require Telstra to agree to a functional separation of its network and retail operations. This post is an attempt to explain how a shifting regulatory environment is forcing major changes for Australia’s incumbent operator. Later this week, another post on Telstra will highlight a recent court verdict which forms the basis for why funtional separation is an unavoidable reality for network operators like FINTEL.
Leadership at telecom operators around the Pacific would be wise to look at the situation Telstra finds itself in down under. The Australian, reports on what can only be described as an implosion. Telstra finds itself battling government regulators, trying to piece together a functioning board of directors, selecting a successor
Telstra comes under attack on many fronts
for a very controversial CEO who has been sent packing, and in the latest development, likely prospect of a shareholder revolt.
Under the confrontational leadership style of CEO Sol Trujillo, the company has for years bristled at what they called burdensome government regulation. At times, this has resulted in Telstra carrying out a quite vocal campaign against Canberra. The aggressive stance of the company under the Trujillo-era culminated in the recent exclusion of Telstra’s bid to tender for construction of a national fiber network and the government opting to go the process under its aegis.
Two more months and then we'll know what the beast looks like
Until the announcement on July 17th of the 2nd round of telecom sector liberalisation, we are like the people in this picture, only able to guess at the parts of the elephant. We have already seen what competition in mobile means, and on that day, we will be given the road map for how Internet will advance in Fiji.
So, as we attempt to piece together what the elephant looks like, let’s take a look at what Dionisia has for us over at FijiLive:
The deregulation of international access, scheduled for July 17 this year, is phase two of the process. It will mean that any domestic reseller of telecommunication services may directly source its international bandwidth needs without going through FINTEL, as was previously the case.
Her article was very informative and helps us get a better understanding of how FINTEL is positioning itself with regard to future competition and government regulation. By getting out ahead of government calls for liberalisation of the international gateway they hope to avoid more serious measures that government might push.
What are the benefits of deregulation and increased competition? From a New York Times article, here is what it has meant for Europe:
Half of the European Union countries could match the United States in broadband use by 2010, Ms. Reding said, if regulators take a tough stance to pry markets open. European Union broadband rates vary from 35.6 percent in Denmark to 7.6 percent in Bulgaria. The United States level was 22.1 percent as of July 2007, according to the Organization for Economic Cooperation and Development.
Ms. Reding emphasized her determination to encourage greater competition in the market and to give regulators the power to force “functional separation” — obliging the owners of telecommunications networks to free the networks from their operating divisions.
In seven member states, more than 60 percent of the broadband market is in the hands of incumbents, she said.
Ms. Reding adds, “The dynamic market force is new entrants”.
Improving rates of broadband usage indicate many things, but as the article shows, it is increasingly a mark of how well-suited a country is as an investment destination. Definitely something for policy makers to take note of in Fiji. Higher levels of broadband internet usage are signs of an educated population with a sophisticated understanding of technology–very important to drawing overseas investment capital in today’s global economy.
The second article is also from the New York Times and deals with the setbacks cities in the US have faced in trying to set up free and/or subsidized municpal wifi networks. The failure to get these networks up is an indicator of how it is important to have a clear business plan mapped out before deploying such networks. Yet again, it is a call for business leaders and policy makers to sit down and really think about what deregulation and broadening access to technology means for Fiji. It is also important to note that these efforts precluded use of WiMAX technology–something that gives Fiji a considerable advantage.
Currently, FINTEL is acting very much in the manner of the European monopolies. Widening access to the internet, especially how it has been described on this blog means that policymakers will to pull themselves together and challenge the way things are being done.
What these articles have in common is growing acceptance of the idea that high levels of internet usage are good for a society. Improved education levels, quality of life gains, increased suitability as an investment destination, and improved emergency communications are just some of the benefits of wider broadband internet usage by a population.
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