Telco market enters new phase of change as technology reshapes competition

“The report highlights the strengths of the sector and the technological changes reshaping it,” Telecommunications Commissioner Tristan Gilbertson says.

"Kiwi consumers benefit from world-class fibre and mobile networks, with prices that generally compare well internationally. These outcomes reflect regulatory settings that have supported investment, innovation, and competition over many years.”

While many of the market's headline indicators remained broadly stable during the year, new technologies are beginning to reshape competition and consumer choice.

“The growing impact of these technologies was the most significant development in this year's report,” Mr Gilbertson says.

"Over the past decade, fibre has transformed connectivity in urban New Zealand. We're now seeing satellite technologies reshaping rural connectivity in much the same way."

Starlink's low earth orbit (LEO) satellite service continued to grow strongly during the year, now making up 27% of rural broadband connections and becoming the largest rural broadband provider. Most of this growth has come from consumers moving off legacy copper services.

"Satellite technologies are changing the economics of rural service provision, creating new options for consumers and intensifying competition across the market," Mr Gilbertson says.

"For the first time, rural consumers can access broadband speeds that rival the urban experience. Consumers are responding to those new options and making active choices about the services that best meet their needs.

"Interestingly, consumers aren’t just chasing faster speeds. Many do value the step-change in performance satellite provides. But others place greater value on local presence, on-the-ground support and knowing there is someone nearby to call when something goes wrong.”

Local providers are holding their ground in the face of intensifying competition by differentiating themselves in this way and through service improvements and sharper pricing.

Across the wider market, customer satisfaction remains below the Commission's benchmark levels and has deteriorated among some larger providers. However, this dissatisfaction is not translating into significantly higher switching, which remains lower than electricity and comparable overseas markets.

"One of the more notable findings is that increasing dissatisfaction isn’t resulting in more consumers switching providers. That suggests there are still frictions preventing consumers from fully exercising choice, and addressing those barriers remains important,” Mr Gilbertson says.

"We're still in the early stages of the current technology transition and the market will likely experience further change. More satellite providers are expected to enter the market, while direct-to-cell services are extending mobile coverage beyond terrestrial networks and challenging long-standing assumptions about where connectivity can be delivered.

"The future shape of the market is still evolving, but consumers should be the beneficiaries of the increased investment, innovation and competition that these technologies are bringing."