2020 Industry Report Key Trends in New Zealand Telecommunications - TCF.org.nz

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2020 Industry Report Key Trends in New Zealand Telecommunications - TCF.org.nz
Key Trends in New Zealand
Telecommunications

2020 Industry Report
2020 Industry Report Key Trends in New Zealand Telecommunications - TCF.org.nz
About the TCF
                               The New Zealand Telecommunications Forum
                                (TCF) plays a vital role in bringing together
                               the telecommunications industry to resolve
                                  regulatory, technical and policy issues.

                             In doing so, we enable the best possible outcomes
                                 for New Zealand consumers. The TCF also
                                provides a range of services for consumers.

TCF Auckland Office
Building C, Level 1
14 — 22 Triton Drive
Albany
Auckland 0632

Phone: 09 475 0203
info@tcf.org.nz
www.tcf.org.nz

Facebook: @letstalktelco
Twitter: @TCFNZ
LinkedIn: TCF (New Zealand
Telecommunications Forum)
2020 Industry Report Key Trends in New Zealand Telecommunications - TCF.org.nz
Contents

Foreword                                                                                                    02

Four key trends in New Zealand telecommunications:                                                          04

          Telecommunications is an essential enabler                                                        05

          The growing impacts of the digital divide                                                          10

          The relentless demand for data                                                                     14

          Need for ongoing investment and industry sustainability                                             17

New Zealand Telecommunications Forum Activities                                                             20

Key Industry Statistics                                                                                     24

Our members                                                                                                 25

The information in this document is presented in good faith using the information available at the time of preparation (June 2020).
The TCF appointed an independent research company (Network Strategies) to undertake industry research sourced from publicly
available information. Unless otherwise referenced, all of the data in report is from the Network Strategies research. Full details on
data sources and references are listed in the full Network Strategies research report, a copy of which is available from the TCF.
While the TCF has made every effort to ensure the accuracy of this report, it takes no responsibility for any errors or omissions in
relation to the information contained herein. The TCF will not be liable to any person or organisation for any damage or loss which
may occur in relation to taking, or not taking, action in respect of any information or advice withing this report.
Front cover image: ©Visual Energy/photonewzealand. Inside front cover image: ©Paul Sutherland Photography
2020 Industry Report Key Trends in New Zealand Telecommunications - TCF.org.nz
02   2020 TELECOMMUNICATIONS INDUSTRY REPORT

             Introduction
             By Geoff Thorn, Chief Executive
             New Zealand Telecommunications Forum

            An internet connection, a laptop, tablet or             In this report we explore the current state
            smartphone, a video conferencing app and             of the industry and consider the future. We
            an entertainment platform. For many of us,           discuss four interconnecting trends:
            that’s all the technology we actually needed            • telecommunications is an essential enabler;
            to keep earning, learning and enjoying life             • the growing impacts of the digital divide;
            when our country went into lockdown.                    • the relentless demand for data; and
               During those seven weeks in Alert Levels 4           • the need for ongoing investment to
            and 3 when we were confined to our ‘bubbles’,              ensure industry sustainability.
            almost every outside interaction – with the             During COVID-19, our fixed and mobile networks
            exception maybe of going to the supermarket –        proved to be world-class in terms of capacity,
            was enabled by an internet connection. Digital       speed and reach. This is due to a decade of
            activity surged as business operations moved         investment, as well as the industry’s ability
            from the office to the home, and education           to work together in a way that is underpinned
            shifted from the classroom to the living room.       by a regulatory model designed to promote
               It was a significant test for the                 competition and innovation. While the industry
            telecommunications sector, and collectively the      is proud of what has been achieved, we are
            industry stepped up to meet unprecedented levels     most excited about what lies ahead.
            of demand. The importance of what the industry
            does gave new meaning to the phrase ‘essential
            services’ and cemented widespread recognition
            that telecommunications is vital to the nation’s
            wellbeing. Previous investment by the industry
            - totalling about $15 billion over the past decade   Geoff Thorn, CEO
            – meant the country’s telecommunications             New Zealand Telecommunications
            infrastructure had the capacity and resilience to    Forum (TCF)
            serve New Zealanders well in this time of crisis.
               What matters now is what comes next.
            The COVID-19 pandemic has transformed
            the way in which New Zealanders use digital
            technologies, with the lockdown experience
            awakening the possibilities for future changes
            to the way we work, learn and play. It also
            highlights the need to ensure that no New
            Zealander is left behind, and that despite
            the economic difficulties we anticipate many
            households will face in the short to medium
            term, we continue to bridge the digital divide.
2020 Industry Report Key Trends in New Zealand Telecommunications - TCF.org.nz
KEY TRENDS IN NEW ZEALAND TELECOMMUNICATIONS   03
2020 Industry Report Key Trends in New Zealand Telecommunications - TCF.org.nz
Four Key Trends
  in New Zealand
Telecommunications
2020 Industry Report Key Trends in New Zealand Telecommunications - TCF.org.nz
KEY TRENDS IN NEW ZEALAND TELECOMMUNICATIONS           05

1                                Telecommunications
                                 is an essential enabler

                                                                                                                                                               also seen huge changes. Ten
The COVID-19 pandemic showed                                                          since March 2020, especially during
just how important internet                                                           lockdown, have seen massive and                                          years ago, most mobile users
access is to enabling people to                                                       unprecedented changes in both the                                        communicated by voice and
earn, learn and live well. Although                                                   scale and the way New Zealanders                                         SMS, and mobile data use was
the lockdown caused major                                                             use telecommunications services.                                         modest. The evolution of 4G
impacts right across the New                                                          The lockdown experience has the                                          technology since its New Zealand
Zealand economy, the situation                                                        potential to accelerate and entrench                                     launch in 2013 has seen mobile
would have been far worse if                                                          some far-reaching changes.                                               data become more widely used.
whole sectors of the working                                                                                                                                   According to the international
population were not able to rely                                                      THE DECADE PRE                                                           industry organisation GSMA, we
on their fixed and mobile services                                                    COVID-19                                                                 now rank third in the world - after
to continue to be productive.                                                         Fibre has, in less than a decade,                                        Australia and Singapore – for
   COVID-19 is shaping up as                                                          surpassed copper to become                                               mobile connectivity. It is an ideal
a defining moment for digital                                                         the dominant fixed broadband                                             setting for the move to 5G, which
connectivity in New Zealand. Prior                                                    technology in New Zealand. The first                                     is being progressively rolled out
to the pandemic reaching our                                                          phase of the Ultra-Fast Broadband                                        since its introduction in late 2019.
shores, the telecommunications                                                        rollout was completed in December                                           In line with international trends,
sector had experienced a decade                                                       2019. By March 2020, almost 1.7                                          traditional voice services – in
during which demand for both fixed                                                    million (82%) New Zealand premises                                       both fixed and mobile – have been
and mobile services increased                                                         had access to fibre1 and of these,                                       declining. Residential telephone
relatively progressively – and while                                                  966,773 (58%) were taking a fibre                                        calls have become just a small
demand growth often exceeded                                                          service – that’s more than double                                        fraction of total network capacity,
initial forecasts, the industry                                                       the initial take-up expectation when                                     with many users opting for ‘over
ensured investment kept pace with                                                     the UFB rollout began in 2012.                                           the top’ voice applications that
the expanding needs of consumers                                                         As with fixed line, mobile                                            use data services instead of
and businesses. But the few months                                                    infrastructure and services have                                         traditional telephony services.

                                                                  UFB rollout progress and connections

                            1,800,000

                            1,350,000
     Homes and businesses

                             900,000                                                                                                                                                             Premises passed

                                                                                                                                                                                                 Premises connected

                             450,000

                                     0
                                                7              18             18               8             8              19             19             9                9                20
                                              01             20             20              01             01             20             20             01               01
                                           r2            h              e                r2             r2            h              e               r2              r2                   20
                                         be          ar
                                                        c            un                be             be          ar
                                                                                                                     c            un               be              be              rc
                                                                                                                                                                                      h
                                     m                              J              em              m                             J              em              m               a
                                  ce                M
                                                                                 pt              ce              M
                                                                                                                                              pt              ce               M
                                De                                           Se               De                                         Se               De

                                                                                                                                                                        Source: MBIE, Crown Infrastructure Partners

1. https://www.crowninfrastructure.govt.nz/wp-content/uploads/CIP-Quarterly-Report-March-2020.pdf
2020 Industry Report Key Trends in New Zealand Telecommunications - TCF.org.nz
06   2020 TELECOMMUNICATIONS INDUSTRY REPORT

                                                                                          Voice traffic, fixed and mobile

                                                       16

                                                       12
                                                                                                                                                                               Chargeable fixed voice
                                  Minutes (billions)

                                                                                                                                                                               Residential local calls
                                                       8
                                                                                                                                                                               Mobile voice

                                                       4

                                                       0

                                                                                                                              /16
                                                                                         12
                                                                 /10

                                                                                                                                                              /19
                                                                            /11

                                                                                                          /14

                                                                                                                     /15

                                                                                                                                                   /18
                                                                                                 /13

                                                                                                                                        /17
                                                                                      11/
                                                                          10

                                                                                                                             15

                                                                                                                                                            18
                                                                                                                   14
                                                              09

                                                                                                                                       16
                                                                                                         13
                                                                                                12

                                                                                                                                                 17
                                                                                    20
                                                                        20

                                                                                                                           20
                                                                                              20

                                                                                                       20

                                                                                                                 20

                                                                                                                                     20

                                                                                                                                               20

                                                                                                                                                          20
                                                            20

                                                                                                                                                                         Source: Commerce Commission
                                                                                  Note: In 2018/19, the Commerce Commission ceased collecting data on residential local (non-chargeable) call minutes.

                             MARCH TO JUNE 2020                                                      overall data traffic has dropped                    but, at the time of writing, has
                             When New Zealand went into                                              back, the graph below depicts                       moved to near to normal levels.
                             lockdown on 25 March 2020 two                                           upload traffic which demonstrates                      Throughout the lockdown,
                             things became rapidly apparent                                          that people are continuing to                       telecommunications companies
                             – demand for data skyrocketed,                                          use productivity applications                       worked hard to support New
                             and voice calling surged.                                               such as video conferencing.                         Zealanders by maintaining high
                               Overall data usage went up                                            The jagged lines in this graph                      network resilience and connectivity,
                             at all hours, but in particular                                         represent half hour breaks – in                     ensuring essential services
                             during the workday. Chorus usage                                        line with the way video conference                  premises could get connected to
                             statistics show that during Alert                                       calls are often scheduled.                          fibre, and boosting mobile cell tower
                             Level 4 its networks experienced                                           Meanwhile, traditional voice                     capacity where it was needed.
                             an increase in daytime traffic                                          calling came back into vogue – it                      Whatever sustained changes to
                             of up to 85% and an increase in                                         was up to 70% higher compared                       consumer and business behaviour
                             evening traffic of up to 40%. While                                     to the pre-COVID-19 baseline                        eventuate, the industry proved

                                                                                                     Network Traffic - Upstream
                                                                                                           Network Traffic - Upstream
                      0.30      0.29 Tbps
                      0.28
                      0.26
                      0.24
                      0.22
                      0.20
     Traffic (Tbps)

                      0.18
                      0.16
                      0.14
                      0.12
                      0.10
                      0.08                                                                                         2 March 2020       1 April 2020       4 May 2020        25 May 2020        10 June 2020
                      0.06                                                                                         3 March 2020       2 April 2020       5 May 2020        26 May 2020        16 June 2020
                                                                                                                   9 March 2020       14 April 2020      6 May 2020        27 May 2020        23 June 2020
                      0.04
                                                                                                                   16 March 2020      16 April 2020      11 May 2020       2 June 2020        25 June 2020
                      0.02                                                                                         Pre-COVID 19       Alert Level 4      Alert Level 3     Alert Level 2      Alert Level 1
                      0.00
                             12:00AM                                   4:00AM                  8:00AM                 12:00PM                 4:00PM                     8:00PM                  12:00AM

                                                                                                                                                                                           Source: Chorus
2020 Industry Report Key Trends in New Zealand Telecommunications - TCF.org.nz
Keeping connected at sea
                                           Vodafone came to the rescue of
                                           seafarers on ships in Lyttelton
                                           Harbour during the lockdown,
                                           ensuring they could be connected
                                           to their loved ones.
                                             Most ships don’t have wireless
                                           internet, which means seafarers
                                           would usually make shore visits to the
                                           Lyttelton Seafarer’s Centre to use their
                                           free WiFi. Due to lockdown restrictions,
                                           crews could not leave their vessels.
                                             Vodafone worked with the Lyttelton
                                           Port Company to supply temporary
                                           wireless broadband modems to
                                           the ships, which connected to a
                                           Rural Broadband Initiative (RBI)
                                           mobile site, to bridge the distance
                                           digitally for these sailors.

       Voice calls volumes on 23 March,Lockdown
                                         the day      the Prime Minister announced
                                                 announcment voice calling (23 March)
      New Zealand would be moving to Alert     Level      4, versus a normal calling day
                                       Normal voice calling (22 March)

                                                                                                                         Lockdown announcment voice calling (23 March)
                   Volume of voice calls

                                                                                                                         Normal voice calling (22 March)
                                                                         Volume of voice calls

                                           06:00     09:00       12:00                           15:00   18:00   21:00       23:00

                                                                                                 Time
                                                                                                                    Source: Spark

during COVID-19 that it is well                              and 87% of the population will           able to experience data speeds
positioned to support such rapid,                            have access to fibre services.           up to ten times faster with 5G,
fundamental shifts in society.                               Currently most New Zealanders can        compared to 4G. 5G will deliver more
                                                                             06:00    09:00      12:00        15:00       18:00      21:00                       23:00
Ongoing significant investment in                            access speeds of up to one gigabit       efficient solutions, such as real-time
new technologies will mean it can                            per second (1Gbps), but the next                 Time for businesses, and
                                                                                                      data analysis
continue to meet the needs of New                            generation of fibre connectivity,        usher in a whole range of exciting
Zealanders in the long term as well.                         already available in many areas,         new technologies including virtual
   In fixed line, investment in fibre                        boosts speeds to up to 10Gbps.           learning applications, connected
connectivity continues at pace.                                 In mobile, New Zealand operators      appliances and eventually the
When the full UFB programme                                  are busy upgrading their networks        much-heralded driverless car.
completes by the end of 2022,                                to 5G technology. This will enable       We’re well positioned to ensure
almost 400 communities and towns                             them to cater to the growing             New Zealand businesses remain
in New Zealand will be connected                             demand for mobile data with users        competitive on the world stage.
2020 Industry Report Key Trends in New Zealand Telecommunications - TCF.org.nz
08   2020 TELECOMMUNICATIONS INDUSTRY REPORT

                          Broadband provides life-
                          line for Waipuna Hospice
                                               Trustpower internet customer             fibre network, enabled by funding
                                               Waipuna Hospice, situated at             from the DHB and Trustpower.
                                               Te Puna just outside Tauranga,              This fibre connection was
                                               provides specialist palliative           invaluable to Waipuna Hospice
                                               care for patients living with a          during lockdown. Although it was
                                               life-limiting illness and support        necessary to close the inpatient
                                               services for them and their              unit, and home visits were more
                                               families. The hospice cares for          restricted in frequency, it was
                                               around 1,000 patients and their          vital that the hospice was able
                                               families each year. The hospice’s        to continue to provide palliative
                                               focus is on ‘Hospice at Home’,           care and support to over 240
                                               supporting patients and their            patients and their families. Like
                                               families so they can remain in           many companies and organisations,
                                               their own homes as long as they          Zoom video conferencing was the
                                               can. Last year their nurses made         solution for the hospice team to
                                               more than 14,320 home visits.            keep in touch with patients and
                                                  When fibre was initially rolled       each other. There was a steep
                                               out in the Western Bay of Plenty,        learning curve both for staff and
                                               Waipuna Hospice’s rural position         patients, most of whom were
                                               meant that, although they are            using video calling for the first
                                               only a few minutes’ drive from           time, but the hospice’s fast, stable
                                               Tauranga’s CBD, they were not on         fibre connection meant their
                                               the roll out. Trustpower worked with     vital work providing care in the
                                               the hospice and the District Health      community could continue, despite
                                               Board to connect the hospice to the      the challenging circumstances.

                                                                  Trustpower worked with the Waipuna Hospice and the District
                                                                      Health Board to connect the hospice to the fibre network
                                                                        which proved to be vital during the COVID-19 lockdown.
KEY TRENDS IN NEW ZEALAND’S COMMUNICATIONS   09

             Text service delivering
             the pizza
The use of automated text services    we set about ensuring we could
rose during Alert Levels 4 and 3 as   do so safely, including setting
they enabled organisations to send    up a contactless pick-up and
rapid-response notifications and      delivery system. Within 24 hours
messages to staff and customers.      Vodafone was able to get us going
  Vodafone set up Sal’s Authentic     with a text service that meant we
New York Pizza chain with their       would be able to communicate
Ready Messenger and multiTXT          efficiently with customers regarding
text service to complement            their orders and make sure they
their online ‘click & collect’        adhered to the government
service during Alert Level 3.         restrictions around distancing and
  Sal’s Pizza Managing                contactless operations,” he says.
Director, Nick Turner, says the         “Our ‘click & collect’ service
multiTXT service was helpful in       provides our customers with a
communicating safety protocols        text when their order is ready.
and customer order confirmations      They show their order confirmation
under Level 3 restrictions.           text at the door, making sure we
  “Once we knew we were going         are getting the right order to the
to be able to operate at Level 3,     correct person every time.”
10   2020 TELECOMMUNICATIONS INDUSTRY REPORT

              2                   The growing impacts
                                  of the digital divide

               With more activity taking place                of the benefits of being connected     to the cell sites. This is a public
               online, more attention is being                are also factors impacting             private partnership between RCG
               placed on those without ready                  digital inclusion. The 2019 Digital    and the Crown, funded by the
               access to online services. The                 Inclusion and Wellbeing report         mobile operators themselves,
               digital divide impacts people                  to the Department of Internal          and Crown funding from the
               in different circumstances for                 Affairs2 noted that “those with        industry-wide Telecommunications
               different reasons – anything                   internet access tend to have           Development Levy and the
               from geographical location,                    higher wellbeing and richer social     Provincial Growth Fund.
               economic disadvantage, age, to                 capital outcomes (e.g. voting)           To date, the RCG has built more
               a lack of knowledge, confidence                than those without access.”            than 100 cell towers in some of
               and trust in technology.                                                              New Zealand’s most isolated
                  Whatever the reason, for                    “Solving the digital                   rural areas, and across rugged
               households a lack of connectivity                                                     terrain where it can be difficult
               means reduced access to:                       divide requires more                   to get coverage to. By March
                  • social connections with family,
                     friends and community,
                                                              than a broadband                       20203, the new infrastructure
                                                                                                     has provided broadband access
                  • services such as banking,                connection.”                           to almost 46,000 households and
                     social services, libraries,                                                     businesses, and mobile services
                     job search and other                        The telecommunications industry     to over 443km of state highway
                     important mechanisms,                    is in a unique position to support     and 36 tourism hotspots, where
                  • education in schools, virtual            Government on potential ways           previously, coverage was poor
                     learning opportunities and               to address how digital solutions       or non-existent. By December
                     online learning for adults,              can bring positive change to the       2023, the infrastructure built
                  • employment opportunities,                groups and communities that            by the RCG across New Zealand
                     including the ability to search          are currently missing out.             will see at least 84,000 rural
                     and apply for jobs, and                                                         homes and businesses, 1400km
                  • healthcare, with doctors able            RURAL CONNECTIVITY                     of state highway and 168 tourist
                     to provide online consultations.         The program of infrastructure          destinations gain mobile and high-
                  The digital divide has been a               investment to connect people in        speed wireless broadband coverage.
               challenge for many years and                   rural and remote geographical            The UFB programme has been
               although much is being done                    locations is ongoing. Rural coverage   expanded to cover 87% of the
               to close the gap, the increasing               is being enhanced through the          population by 2022, while all mobile
               prevalence and importance of                   Rural Broadband Initiative Phase       operators have coverage to over
               online services means the negative             2 (RBI2) and the Mobile Black          97% of the population (of which
               impact on those who don’t have                 Spot Fund (MBSF). Cell sites           95% is within 4G coverage areas).
               the necessary access, skills and               under both the RBI2 and MBSF              These programmes are
               confidence is greater than ever.               are being deployed by the Rural        deploying essential infrastructure
                  The digital divide is not an easy           Connectivity Group (RCG) – a           that will enable more Kiwi
               problem to solve as it requires more           joint venture between 2degrees,        households and businesses
               than a broadband connection. Cost,             Spark and Vodafone – with all          to access better broadband
               motivation and an understanding                operators having equal access          services, now and in the future.

2. http://motu-www.motu.org.nz/wpapers/19_17.pdf
3. https://www.crowninfrastructure.govt.nz/wp-content/uploads/CIP-Quarterly-Report-March-2020.pdf
KEY TRENDS IN NEW ZEALAND TELECOMMUNICATIONS   11

©Paul Sutherland Photography
KEY TRENDS IN NEW ZEALAND TELECOMMUNICATIONS   13

AFFORDABILITY                                             Zealanders in these tough times –            experiencing financial hardship
One of the most vulnerable groups                         including working with the Ministry          because of the pandemic.
in terms of the digital divide                            of Education on its distance learning            It is important to note that for
are those on low incomes, who                                                                          many New Zealanders the cost of
struggle to afford many goods and                                                                      their telecommunications services
services that most of us take for
                                                          “The digital divide                          is lower than ever. In the twelve
granted. There are also others who                        has been a challenge                         months between December 2018 –
will experience a sudden fall in                                                                       2019, telecommunications costs as
income due to job loss or business
                                                          for many years.”                             measured by the Consumer Price
failure because of COVID-19.                                                                           Index fell by 1.9%. By comparison
   In response to COVID-19, the                           education package, supporting                the cost of other utilities rose
industry engaged with Government                          customers by removing data caps              – electricity increased by 1.4%,
and other stakeholders to ensure it                       where possible, and not charging             gas by 2.5% and property rates
is responsive to the needs of New                         late fees or disconnecting those             and related services by 4.9%.

                                           Consumer price index: telecommunications vs utilities

                                   1,400

                                   1,050
          Index of CPI component

                                    700

                                                                                 Local authority rates and payments
                                                                                 Electricity
                                                                                 Gas
                                    350
                                                                                 Telecommunication services

                                      0
                                           2010   2011   2012    2013    2014     2015         2016     2017      2018     2019

                                                                    Year ending December

                                                                                                  Source: Statistics New Zealand
14   2020 TELECOMMUNICATIONS INDUSTRY REPORT

             3                                The relentless
                                              demand for data

                                                                                            New Zealanders’ appetite for data                       increased dramatically over
                                                                                            has grown steadily as the cost                          the past decade, with average
                                                                                            has decreased over the past ten                         monthly usage per connection
                                                                                            years - enabled by the evolution                        reaching 2.69GB in 2018/19.
                                                                                            in network technology in both                                Already at record levels, data
                                                                                            fixed and mobile networks, and                          usage surged during the COVID-19
                                                                                            fuelled by increasing smartphone
                                                                                                                                                    lockdown, rising above the brief
                                                                                            penetration and new applications.
                                                                                                                                                    peak experienced as the Rugby
                                                                                               In 2018/19 the average fixed
                                                                                                                                                    World Cup was watched via
                                                                                            broadband connection used
                                                                                                                                                    broadband streaming in late 2019.
                                                                                            208GB per month – just five
                                                                                            years earlier, the average was                               The graph from Chorus on the
                                                                                            32GB per month, representing                            next page illustrates the rise in
                                                                                            a compound annual growth                                fixed data usage following the
                                                                                            rate (CAGR) of just over 45%.                           move to Alert Levels 4 and 3, and
                                                                                               Meanwhile, mobile data                               the continued increased demand
                                                                                            usage by New Zealanders has                             for data during Alert Level 2.

                                                                      Average data usage per fixed broadband connection

                                                               300
                         broadband connection (GB per month)

                                                               250
                             Average data usage per fixed

                                                               200

                                                               150

                                                               100

                                                                50

                                                                 0
                                                                            10        /11       11/
                                                                                                   12        /13        /14        /15        /16        /17        /18        /19
                                                                         9/        10                     12         13         14         15         16         17         18
                                                                     20
                                                                        0        20           20        20         20         20         20         20         20         20

                                                                                                                                                    Source: Commerce Commission
KEY TRENDS IN NEW ZEALAND TELECOMMUNICATIONS                 15

                                                                       Average monthly data usage per mobile connection

                                                                3.0
                                    Data usage (GB per month)

                                                                2.0

                                                                1.0

                                                                0.0
                                                                            /10          11          12        /13                     /15          /16          /17        /18        /19
                                                                           9         10/          11/       12            /14        14          15           16         17         18
                                                                                                20                     13
                                                                       200        20                      20         20           20           20           20         20         20

                                                                                                                                                          Source: Commerce Commission

                                     New Zealand has the fastest
                                   uptake of fibre-optic broadband
                                       in the developed world.

                                                                                              Network Traffic - Downstream
                                                                                                          Network Traffic - Downstream
                  3.0
                  2.8       2.64 Tbps
                  2.6
                  2.4
                  2.2
                  2.0
Traffic (Tbps)

                  1.8
                   1.6
                   1.4
                   1.2
                  1.0
                  0.8
                  0.6                                                                                                           2 March 2020          1 April 2020      4 May 2020           25 May 2020      10 June 2020
                                                                                                                                3 March 2020          2 April 2020      5 May 2020           26 May 2020      16 June 2020
                  0.4                                                                                                           9 March 2020          14 April 2020     6 May 2020           27 May 2020      23 June 2020
                  0.2                                                                                                           16 March 2020         16 April 2020     11 May 2020          2 June 2020      25 June 2020
                                                                                                                                Pre-COVID 19          Alert Level 4    Alert Level 3         Alert Level 2    Alert Level 1
                 0.00
                         12:00AM                                      4:00AM                    8:00AM                      12:00PM                        4:00PM                  8:00PM                      12:00AM

                                                                                                                                                                                                         Source: Chorus
Moea Minhinnick with her moko and
their new Skinny Jump modem

                                    Getting Waiuku whānau
                                    connected during lockdown
                  When the nation goes into lockdown     to whānau. Through this initiative,      training on how to use the modem
                  but your local community isn’t         HTTM were able to provide a              and internet connectivity.
                  connected, what do you do? Health      subsidised broadband service to             “But once they were connected,
                  Through The Marae in Waiuku            help bridge the digital divide in New    and they knew how to reach their
                  acted quickly to get whānau            Zealand by providing an affordable       moko/mokopuna nui, some people
                  connected to loved ones, health        internet connection at home to           even cried, it was massive. The
                  professionals and schools using        those who currently go without.          other big thing is affordability,
                  Skinny Jump subsidised broadband.         Skinny Jump is a not-for-profit and   many whānau had been using
                     Health Through The Marae (HTTM)     is the result of collaboration between   mobile phone data which was
                  is a small non-profit Māori health     Spark, the Spark Foundation,             more expensive, but Skinny Jump
                  provider delivering a range of         Skinny and a network of community        broadband is very affordable.”
                  free services including GP, mental     organisations around New Zealand.           Piri said that the broadband
                  health, podiatry, social services      The service provided is $5 for 30GB      connectivity will make a
                  and gym facilities to the marae        of data (with the option to renew up     huge difference to the future
                  whānau and wider community.                                                     for whānau in Waiuku.
                     HTTM supports a range of
                  vulnerable whānau and understands
                                                         “Broadband                                  “Accessing health care remotely
                                                                                                  via virtual consultations will make
                  first-hand the need for better         connectivity will                        a big difference, whānau can stay
                  internet connectivity within their                                              in the comfort of their own homes,
                  community. This was especially
                                                         make a huge                              be surrounded by other whānau
                  evident during the country’s           difference to the                        members during consultation and
                  COVID-19 lockdown period when                                                   they won’t have to travel as much.
                  many local whānau endured              future for whānau.”                      That’s particularly important for
                  financial and emotional hardship                                                moko living with kaumātua. Now
                  and many were without an internet      to five times a month) and comes         that homes have WiFi and tamariki
                  connection at home. Additionally,      with a free Wireless Broadband           have the resources, they are able
                  with schools and workplaces closed,    modem. Skinny Jump provided a            to continue learning online. We’re
                  for these Kiwis this meant they        lifeline during the lockdown for         also working with our rangitahi
                  couldn’t work or study from home,      local elderly and vulnerable whānau      (youth) who will support and teach
                  further compounding inequality         members in Waiuku by providing an        their elders the basics of email
                  within these communities.              essential communication service          and internet use. Local whānau
                     HTTM worked closely with Digital    to get whānau connected.                 are good at traditional crafts such
                  Inclusion Alliance Aotearoa (DIAA)        Piri Minhinnick of HTTM said that     as weaving, so we’re looking at
                  who helped them with the application   a lot of whānau in Waiuku both           supporting whānau to develop a web
                  process for Skinny Jump delivery       elderly and vulnerable needed            page to sell their products online.”
KEY TRENDS IN NEW ZEALAND TELECOMMUNICATIONS   17

4
Significant investment during
                                           Need for ongoing investment
                                           and industry sustainability

                                                                     and fibre broadband connections             and private investment in New
the past decade has helped to                                        experienced no significant decrease         Zealand has exceeded $1.5 billion
ensure the telecommunications                                        in download speeds during                   and by 2018 New Zealand ranked
networks have been able to                                           lockdown, despite unprecedented             the fourth highest country in
withstand the toughest test –                                        demand on broadband                         the OECD in terms of investment
the entire country in lockdown,                                      networks 4. Telecommunications              proportional to GDP. We were
relying on telecommunication                                         Commissioner Stephen Gale said:             exceeded only by the Slovak
services for business, education                                        “Chorus and other providers              Republic, Australia and Slovenia.
and entertainment. Fixed                                             reported record levels of online              Annual investment by the
line and mobile networks are                                         activity. But despite that increase,        telecommunications industry has
complementary and enable                                             the latest report from our                  consistently surpassed 20% of
ubiquitous connectivity wherever                                     independent testing partner,                annual revenue during the past
people might find themselves.                                        SamKnows, shows that copper                 decade, peaking in 2009/10 and
   The Commerce Commission’s                                         and Fibre 100 plans continued               2014/15 (driven in part by 3G
Measuring Broadband New Zealand                                      to perform well, with average               and 4G mobile technology roll-
report released in May 2020,                                         download speeds unaffected.”                outs) but steadily growing again
shows that, on average, copper                                          Since 2012/13, annual public             over the past three years.

                                      Telecommunications investment as a percentage of revenues

                                     30%

                                     25%
        Investment (% of revenues)

                                     20%

                                     15%

                                     10%

                                      5%

                                      0%
                                                /10

                                                                                                                               /19
                                                                                 /14

                                                                                          /15

                                                                                                   /16

                                                                                                                      /18
                                                                         /13

                                                                                                            /17
                                                         11

                                                                 2
                                                       0/

                                                               1/1

                                                                                                                             18
                                                                                         14
                                            09

                                                                                                            16
                                                                                13

                                                                                                  15
                                                                       12

                                                                                                                     17
                                                         1

                                                                 1
                                                      20

                                                              20

                                                                      20

                                                                               20

                                                                                       20

                                                                                                20

                                                                                                         20

                                                                                                                    20

                                                                                                                            20
                                           20

                                                                                       Source: Commerce Commission, Network Strategies

4. https://comcom.govt.nz/news-and-media/media-releases/2020/independent-tests-show-nzs-broadband-performed-well-during-COVID-19-lockdown
18   2020 TELECOMMUNICATIONS INDUSTRY REPORT

                                                       New Zealand telecommunications investment

                                                  2,000

                                                   1,500
                                                                                                                              Other investment
                       Investment ($, millions)

                                                                                                                              Mobile access network
                                                                                                                              IT systems

                                                   1,000                                                                      Wireless networks
                                                                                                                              Core and backhaul network
                                                                                                                              Fixed access network
                                                                                                                              Copper (non-fibre) access network
                                                                                                                              Fibre for access network
                                                       500

                                                        0
                                                             2009/10   2011/12      2013/14     2015/16     2017/18

                                                                                               Source: Commerce Commission

                                          New Zealand telecommunications
                                          sector investment is 4th highest in
                                             OCED as percentage of GDP

                                                                         Evolution of mobile networks

                                                  12                                                                                  700

                                                                                                                                     600
                                                  10
                 Theoretical download speed

                                                                                                                                     500
                                                  8
                                                                                                                                               Latency (ms)
                             (Gbit/s)

                                                                                                                                     400
                                                  6
                                                                                                                                     300

                                                  4
                                                                                                                                     200

                                                  2                                                                                   100

                                                  0                                                                                        0
                                                                1G           2G             3G               4G             5G
                                                             (1980s)      (1990s)        (2000s)          (2010s)        (2020s)

                                                                          Theoretical download speed         Latency

                                                                                                                              Source: ITU
KEY TRENDS IN NEW ZEALAND TELECOMMUNICATIONS   19

           Predicted global M2M connections by key verticals, CAGR 2018-2023

                          Connected car

                        Connected cities

                                 Energy

                        Connected home

                       Connected health

                        Connected work

                                  Retail

            Manufacturing & supply chain

                                           0%     5%       10%      15%     20%         25%       30%      35%

                                                                 CAGR 2018-2023 (%)
                                                                                                           Source: Cisco

   Whether it is fibre roll-out             increasing deployment of video            of economic activity, it is a
or the deployment of new                    applications on M2M devices, plus         significant New Zealand employer
technologies, continued investment          the rise in applications requiring        with around 12,000 full time
in infrastructure and innovation            greater bandwidth and lower               employees working directly for
will remain a hallmark of the New           latency – such as telemedicine            telecommunications companies,
Zealand telecommunications sector.          and smart car navigation systems          and tens of thousands of suppliers
   A key driver for ongoing                 – will result in M2M traffic              and sub-contractors employed
investment is technological change,
and the need to continually                 “Continued investment in infrastructure
upgrade network capability. A good
example of this is the upgrade
                                            and innovation is a hallmark on the New
from 4G to 5G technology which              Zealand telecommunications sector.”
will enhance the user experience
through higher speeds, greater              increasing at a greater rate than         throughout the sector. The
capacity and lower latency.                 the number of connections.                dramatic changes brought about
    Another example of the next                Cisco forecasts that globally M2M      by the COVID-19 pandemic have
evolution in technology is the              connections will comprise 50% of          emphasised the need for all sectors
Internet of Things (IoT), enabled           all networked devices by 2023, up         to play their part in maintaining
by Machine to Machine (M2M)                 from 33% in 2018. Connected car           social and economic cohesion.
connections. Traditionally M2M              applications (fleet management,           While individual companies
traffic has been much lower than            in-vehicle entertainment,                 have their own corporate social
that from other devices such                emergency calling) will be the            responsibility initiatives, collectively
as smartphones and personal                 fastest growing component.                the industry runs programmes
computers but this is set to                   The telecommunications                 aimed at supporting consumer
change. Cisco notes that the                sector is not only a key driver           wellbeing and the environment.
20   2020 TELECOMMUNICATIONS INDUSTRY REPORT

            New Zealand
            Telecommunications
            Forum activities

            The New Zealand                      BLACKLISTING                            generally it is the more vulnerable
            Telecommunications Forum (TCF)       Mobile providers around New             who are the victims. These scams
            plays a vital role in bringing       Zealand work together, facilitated      can be perpetrated by phone, email
            together the telecommunications                                              and social media using a range of
                                                 by the TCF, to blacklist all lost and
            industry to resolve regulatory,                                              methodologies from romance fraud
                                                 stolen devices across all mobile
            technical and policy issues.                                                 perpetrated over quite a long period
                                                 networks in New Zealand.
            In doing so, we enable the best                                              of time, through to identity theft
            possible outcomes for New Zealand    CONSUMER PROTECTION                     where the victim’s personal details
            consumers. The TCF also provides     Scams continue to be a problem          are transferred to the scammer.
            a range of services for consumers.   for New Zealand consumers, and            The industry has been working
KEY TRENDS IN NEW ZEALAND TELECOMMUNICATIONS   21

collectively to tackle scam calls.                               as possible can be blocked.              barrier for new entrants trying
The TCF’s Code for Scam Calling                                    In addition to blocking scam calls,    to capture market share.
Prevention outlines a process                                    the TCF is also working on a range
among the telecommunications                                     of initiatives to block and prevent      CONSUMER COMPLAINTS
providers to notify each other                                   scam texts and prevent fraudulent        All TCF members are part
of scam call incidents so they                                   sim swaps and number porting.            of the Telecommunications
can be blocked across all                                                                                 Dispute Resolution (TDR), a
New Zealand networks.                                            NUMBER PORTABILITY                       free and independent service
  As consumers report scam                                       Number portability is an important       whose aim is to help consumers
calls to a variety of different                                  service that is managed and              resolve complaints with their
organisations, the TCF has invited                               facilitated by the TCF. It is            telecommunications providers.
a range of agencies, including                                   recognised by regulators as a               In 2019, the TDR received 2,922
Netsafe, CERTNZ, Inland Revenue,                                 key facilitator for competition          complaints and enquiries, which
the Commission for Financial                                     because without it, consumers            amounts to an average of 2.88
Capability and banks, to sign a                                  would be forced to change their          complaints and enquiries per 10,000
Memorandum of Understanding                                      number when switching between            connections per quarter5. The graph
so they can report scam calls                                    service providers. This would            below provides a comparison of
directly to the industry. This                                   be a considerable disincentive           New Zealand with Australia and
ensures that as many scam calls                                  for switching and a fundamental          Ireland for the final quarter of 2019.

                                               Telecommunications complaints in New Zealand compared
                                                  to Australia and Ireland, October to December 2019

                                               20
           Complaints per 10,000 connections

                                               15

                                               10

                                                5

                                                0
                                                        Mobile                Fixed broadband             Fixed voice

                                                             New Zealand       Australia        Ireland

             Source: Telecommunications Dispute Resolution, Telecommunications Industry Ombudsman, ACMA, ComReg

             Notes: 1. New Zealand data includes complaints and enquiries, Australia and Ireland data include complaints only.
             2. Ireland fixed broadband data also includes fixed voice complaints
             3. New Zealand fixed voice complaints and enquiries for the December quarter is estimated from data for July - December 2019

             5. https://www.tdr.org.nz/sites/default/files/field/file_attachment/TDR-Bi-Annual-Report-2019-PT-2-infograph-page.pdf
22    2020 TELECOMMUNICATIONS INDUSTRY REPORT

                  Our not-for-profit RE:MOBILE          phone recycling awareness
                  programme encourages New              and encourage the responsible
                  Zealand consumers to recycle          management of e-waste.
                  their unwanted mobile handsets,         Since 2014 the following
                  with proceeds donated to charity      has been achieved:
                                                          • over 535,200 mobile handsets
                  Sustainable Coastlines.
                                                             have been collected for
                    RE:MOBILE is New Zealand’s only
                                                             re-use or recycling,
                  mobile phone recycling scheme
                                                          • over $135,000 has been raised
                  which is accredited by the Ministry
                                                             for Sustainable Coastlines,
                  for the Environment. This industry-        with the proceeds enabling
                  wide programme aims to reduce the          more than 10,000 trees and
                  environmental impact of unwanted           plants to be planted along
                  mobile handsets, increase mobile           New Zealand waterways.

Olympian Eliza McCartney as
RE:MOBILE ambassador in 2019
KEY TRENDS IN NEW ZEALAND TELECOMMUNICATIONS   23

                              Au
                W                             Pd

     Nd                                                          Pt

Al                                                                         Ag

             WHEN YOU RECYCLE YOUR
Pb                                                                         Cu
          MOBILE PHONE WITH RE:MOBILE, MORE
           THAN 95% OF THE MATERIALS
              THAT MAKE UP YOUR PHONE
                                                                 Zn
     Co          WILL BE REUSED.

                 Li                            Sn
                              Ni

     A TYPICAL IPHONE IS ESTIMATED TO CONTAIN APPROXIMATELY
             0.034G OF GOLD AND 0.34G OF SILVER.
24   2020 TELECOMMUNICATIONS INDUSTRY REPORT

            Snapshot: New Zealand’s
            telecommunications industry
            by the numbers

                                      100Mbps
                                                2/3
                                                of customers on fibre connections have services
                                                of 100Mbps or greater

                                                4th
                                                highest level of telecommunications investment
                                                in the OECD proportional to GDP

                                                6 million
                                                mobile connections

                                                >100
                                                celltowers in New Zealand’s most isolated rural areas
                                                have been built by the Rural Connectivity Group

                                                73,096
                                                mobile phones recycled with RE:MOBILE in 2019

                               5G               >10x
                                                faster end-user speeds will be delivered by 5G,
                                                compared to 4G

                                                2022
                                                is when the second phase of the Ultra-Fast
                                                Broadband network will be completed and be
                                                available to 87% of New Zealand premises
KEY TRENDS IN NEW ZEALAND TELECOMMUNICATIONS   25

The TCF comprises the following industry participants:
TCF Auckland Office
Building C, Level 1
14 — 22 Triton Drive
Albany
Auckland 0632

Phone: 09 475 0203
info@tcf.org.nz
www.tcf.org.nz

Facebook: @letstalktelco
Twitter: @TCFNZ
LinkedIn: TCF (New Zealand
Telecommunications Forum)
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