Entertainment & Media Outlook 2011-2015 - PwC

Internet households and mobile internet subscription (millions)Historical dataForecast data2006 2007 2008 2009 2010 2011 2012 2013 2014 20152011-2015CAGRBroadband 0.39 0.60 0.80 1.02 1.04 1.08 1.14 1.21 1.27 1.33 5.0%Dial-up 0.69 0.68 0.63 0.34 0.30 0.27 0.23 0.18 0.14 0.10 -19.7%Total fixed line 1.08 1.28 1.43 1.36 1.34 1.35 1.37 1.39 1.41 1.43 1.3%Mobile internet subscribers 0.06 0.10 0.16 0.27 0.45 0.53 1.01 1.76 2.78 3.75 52.8%Sources: Statistics New Zealand, PwC New Zealand, Wilkofsky Gruen AssociatesVodafone has agreed to focus on buildingcell towers, giving rural householdsaccess to wireless broadband. Telecomwill focus on connecting schools to fibreinternet, linking cell towers to the mainnetwork and improving its copper-wireservices to offer higher speeds. Underthese arrangements, 97.8 percent ofhouseholds will receive a minimumpeak speed of 50 Megabits per second(Mbps) and 98.7 percent will getdownload speeds of 100 Mbps or faster.The remaining 1.3 percent will need asatellite service.Construction began in the second halfof 2011 and is expected to be completewithin six years. The Government,through its investment vehicle CrownFibre Holdings (CFH) has also enteredinto agreements to build Fibre Optics tothe Premises network to 75 percent ofNew Zealand by 2020.CFH has selected partners as follows:• Whangarei area – Northpower• Central North Island areas –UltraFast Fibre led by WEL Corp• Christchurch and surrounding areas– Enable Networks• All remaining areas – Chorus(the network arm of TelecomNew Zealand).As part of the deal Telecom’s networkarm, Chorus will split from its retailarm and list separately on the NewZealand Stock Exchange. This measureis to ensure fair access to wholesaleUFB for all broadband retailers. Thedemerger is expected to take placeby the end of calendar 2011, but issubject to a shareholder vote. TheTelecommunications (TSO Broadbandand Other Matters) Bill was passed intolaw on 23 June 2011, paving the way forthe breakup of Telecom and establishingthe regulatory environment for the ultrafastbroadband scheme. Chorus has alsoindicated that it intends to negotiatewith the Christchurch City HoldingsLimited (the owner of Enable) for up to a50 percent stake in that venture. 2Price has often been cited as a potentialinhibiting factor in UFB take up,however documents released in Marchshow CFH has reached agreementon a range of wholesale charges forconnections to the UFB network that,prima facie, appear competitive withcurrent copper based broadbandwholesale charges that shouldencourage retail service providers tomigrate customers onto the superiorperforming UFB network.Chorus wholesale UFB charges 3Product Upstream and downstream speeds Committed information rate (CIR) Pricing at commencement (excl. GST)Entry level consumer 30 Mbps Downstream / 10 Mbps Upstream 2.5 Mbps Symmetrical NZ$37.50Household 100 Mbps Downstream / 50 Mbps Upstream 7.5 Mbps down, 2.5 Mbps up NZ$55Business 100 Mbps Downstream / 100 Mbps Upstream /Premium Business*EIR = Excess Information rateMbps = Megabits per secondGbps = Gigabits per second1 Gbps Downstream / 1Gbps UpstreamPurchase CIR/EIR* in incrementsto suit customer needPurchase CIR/EIR* in incrementsto suit customer needNZ$380, plus CIR and EIRNZ$455, plus CIR and EIRSource: Telecom2 ‘Schools, hospitals first in line for ultra-fast internet’, Susie Nordqvist, New Zealand Herald, 24 May 2011.3 ‘Outline of UFB agreement between Chorus and Crown Fibre Holdings’, Telecom Corporation of New Zealand press release, 24 May 2011.18 Outlook | New Zealand Entertainment and Media 2011-2015