Home Internet, Kiwi-style

While I’m fiercely proud to be part of the leadership team at Optus, Australia’s second strongest brand, I am, in fact, a Kiwi.

And when having discussions around home internet with friends and family in New Zealand, my pride takes a bit of a hit. To put it bluntly: New Zealand’s delivery of home internet services outshines Australia by a significant margin.

The two countries, which share  similar “best-for-our-people and economy” mindsets, started their national government-funded rollouts at roughly the same time, yet have delivered vastly different outcomes for their internet users.

The short version: New Zealanders are paying less for higher speeds than Australians. And this is important for all of us, given how we rely on connectivity to use digital services in nearly everything we do. Speed and affordability are also critically important to the competitiveness of our economy, so will affect all of us.

Let me drill down on this a bit more.

Speed

On the whole, New Zealand’s broadband is faster.

Only 17% of Aussies are experiencing 100mbps+ speeds, and 29% of Australians on NBN have  speeds of 25mbps or less. Most Australians are on 50Mbps plans.

Why? Australia's nbn is unable to deliver everyone with a ‘like-for-like’ experience: high-speeds may simply not be an option due to where your household is located; fibre to the premises, fibre to the node, fibre to the kerb, and hybrid fibre-coaxial all differ in terms of their capabilities.

In New Zealand, speed plans less than 50Mbps aren’t even available. Currently around 90% of New Zealanders are experiencing 100Mbps+ internet speeds. In its most recently-released Results, Chorus reported that around 17% of connections are already on 1Gbps speeds. And they’re rapidly moving to offer 2Gbps, 4 Gbps and 8 Gbps connections!

There are plans to provide even faster broadband. In 2008, New Zealand has initiated its Ultra-Fast Broadband program, which aims to cover 87% of the population by the end of 2022 with fibre-to-the-home networks. This public–private partnership between the government and four companies, the largest of which is wholesaler Chorus, will deliver 87 % of Kiwis with 1Gbps+ speeds.

Pricing and network costs

Kiwis are paying less for their broadband because the network provider’s fees for retailers are less than the nbn’s.

The average retail price for the leading retailers, who serve the majority of customers, is just over $80 per month for 50/20 speeds, though some consumers pay as much as $115.  One factor here is that nbn’s razor thin margins don’t leave much flexibility for retailers. 

New Zealand’s three largest retailers all offer plans under AUD$65 for speeds over 50Mbps.

A major driver of the difference in consumers’ pricing is the  way wholesale network fees are structured. In Australia retailers must pay the network provider (nbn co) a base fee of around 12.5% more than retailers do in NZ for an equivalent product. Although perhaps the biggest difference between the two countries, and what places Australia at a disadvantage, is that nbn charges retailers a capacity fee that reflects our customers’ use of the network. New Zealand does not charge for data consumption at all.

In New Zealand, these lower network costs have enabled more affordable pricing of higher speed services, that in turn has led to widespread adoption of better home internet. And that is enabling richer internet experiences and supporting the growth of the digital economy in NZ.

So to recap, New Zealanders pay less for better home internet. As Australia looks to be a world leading digital economy, we should be delivering the home internet that Australians deserve and enabling world-class  digital connectivity. 

Despite my Kiwi roots, I’d love to see Australia pull ahead on home internet. Please share with me your comments and suggestions.

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