New Zealand pays more for fixed line call costs

A report benchmarking New Zealand prices for fixed line and mobile telecommunications services against international prices has shown that New Zealand ranks in the bottom third.

Voice and SMS services were compared to other OECD countries, while broadband prices were made to face those in Australia, the UK, Norway and Sweden.

The Commerce Commission report found that high monthly line rental charges and high fixed-to-mobile calling pricing made New Zealand rank poorly compared to other countries.

“Having no alternative to a plan with a fixed price for unlimited local calls favours those consumers who make a lot of local calls and disadvantages those who make few. Consumers making few monthly calls effectively cross-subsidise consumers who make a large number of calls,” said Dr Ross Patterson, Telecommunications Commissioner.

Broadband prices in New Zealand were compared to prices in four other countries.

“Although the Commission is cautious about drawing definitive conclusions from limited fixed line broadband benchmarking, it appears that the price of broadband in New Zealand for low and medium users is in line with that observed in other countries. High users, however, face a significantly higher price in New Zealand compared to other similarly developed countries,” said Patterson.

The common argument is that New Zealand’s geographical isolation and the cost of international bandwidth is behind New Zealand’s higher prices. The report notes that while Australia faces a similar issue, its prices are significantly lower than New Zealand for high users.

The cost of mobile broadband is “high across all levels of usage, and significantly higher in the high use basket (over 8 GB) where New Zealand prices are almost triple those of the cheapest country, Sweden,” the report added.

In comparison to Australia, New Zealand pays significantly more for mobile voice and SMS plans for medium and high usage.

“For broadband, Australia is cheaper than New Zealand in every mobile usage basket and for the 200MB basket the price in New Zealand is almost double that in Australia,” says ComCom. “For fixed line broadband, New Zealand is cheaper than Australia for low and medium usage (2GB and 10GB), but significantly (31%) more expensive for high usage (40GB plus).

The full telecommunications benchmarking report is available here.