Commerce Commission says mobile competition OK but could be better

The Commerce Commission has released the preliminary findings of its study into New Zealand’s mobile services market, saying it shows competition indicators such as pricing, coverage and choice of mobile services “trending in a positive direction for consumers”.

However, telecommunications commissioner Dr Stephen Gale said that, although the study found that consumers to be more satisfied with mobile than with fixed line services, there was room for improvement in some areas.

“Prices for large data plans are noticeably higher than Australia and while mobile data use grew 69 percent last year, reliable 4G coverage is not so widespread.”

The report is the outcome of a study the commission launched in October 2017 to deal with what it said were a number of potential competition and regulatory questions that had been accumulating for some time as a result of fixed-mobile convergence, driven by evolving technology and evolving consumer preferences.

In March 2018 the commission expanded the scope of the study following submissions expressing concerns with the structure of the market. It released an issues paper in August 2018.

In the preliminary report the commission cited data from Opensignal showing New Zealand ranks 8th out of 88 countries for 4G speed. But Gale said information on performance measures like call dropping rates and coverage gaps was hard to find.

Dr Gale identified the allocation of spectrum as the key challenge for competition, saying imbalances in spectrum holdings between operators – across all bands – could affect competition.

“Our view is that, in its design of future spectrum allocation processes, MBIE should have wholesale and retail competition matters at the forefront of decisions,” he said.

“We see no need to regulate at this stage but will keep an eye on the ability of new ‘virtual’ operators to access wholesale services. We expect more spectrum and consumer engagement will help this market to develop where it is commercially viable.”

The study found that while consumers consider switching providers to be a reasonably simple process, there is some resistance to switching. The commission said it had begun further work to better understand the impact of this inertia on consumers.

The Commission is inviting submissions on the preliminary findings by 28 June 2019. It expects to publish its final findings on 30 September 2019.

The Commission has also released several expert reports alongside its preliminary findings. These were commissioned as part of the study and include reports on the ‘virtual’ operator landscape globally and locally, and a view of the global industry trends relevant to mobile services.

They are:

- a study into global mobile industry trends, implications for New Zealand by Red Dawn Consulting;

- a study into the MVNO landscape: Global perspectives and New Zealand applications, also from Red Dawn Consulting;

- Behavioural Biases in Telecommunications, from The Behavioural Insights Team.

Copyright © 2019 IDG Communications, Inc.

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