A new research study has found Australia and New Zealand’s internet service provider (ISP) costs for domestic and international IP transit are comparable, contrary to the belief New Zealanders pay more.
The report by Market Clarity found the difference in broadband allowances is due to competitive pressure, not the underlying costs of service provision.
The study found Australian ISPs also allocated more average revenue per user (ARPU) to wholesale costs, such as ADSL access service and domestic backhaul, than New Zealanders – it found a median profit margin of 26.3 per cent for Australian retail broadband ISPs versus 38.8 per cent for New Zealand ISPs.
However, New Zealand ISPs spend less per month on network costs at A$26.07 compared to A$37.54 in Australia.
“There is a widespread perception, particularly in New Zealand, that the costs of international services drive the difference between the allowances offered [to] Australian and New Zealand broadband customers,” Shara Evans, Market Clarity CEO, said in a statement.
“However, our research suggests that other factors are more significant. These might include the different domestic regulatory regimes in the two countries and the competitive pressure brought about by Australia’s much larger number of retail ISPs.”
Different business issues are also affecting both countries. In Australia, the National Broadband Network's (NBN) pricing models is of concern – CVC pricing in particular – and emerging as potential constraints in growing customer allowances, according to the report.
“ISPs are also worried about the large number of NBN POIs (points of interconnect),” Evans said.
Meanwhile, New Zealand ISPs are concerned about growth being held back by a lack of access to content.
“Although some New Zealand respondents to our study said their broadband growth is constrained by factors like IP transit costs, this was not corroborated by our comparison of their cost base relative to Australian providers,” Evans said.
The report also found Australians opt for larger data plans at 115GB per month, on average, compared to 25GB per month in New Zealand.
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