2007 Mobile and Broadband in New Zealand

1. MARKET AND INDUSTRY ANALYSIS

1.1 Overall market analysis

1.1.1 Making up the balance of Telecom’s promises

1.1.2 Scale and volume

1.1.3 Strong government policies

1.1.4 Share holders interest

1.1.5 Infrastructure problems

1.2 Analysis of the ISP industry

1.3 Broadband market

1.4 Mobile review

1.5 Changing the telecoms environment

1.5.1 Global Perspective 1

1.5.2 The policy changes in May 2006

1.5.3 Global perspective 2

1.6 NGN by 2008

1.7 Mobile on the way to 4G

1.8 Broadband moving to ADSL2

1.9 Digital media - where are the leaders?

1.10 Regulatory review

1.11 Structural vs operational separation

1.12 Unfinished regional business

2. KEY STATISTICS

3. MOBILE COMMUNICATIONS

3.1 Statistical overview

3.1.1 Subscriber and operating statistics

3.1.2 Revenue statistics

3.1.2.1 Overall revenue by operator

3.1.2.2 Monthly ARPU per operator

3.1.2.3 Other revenue

3.1.3 Telecom and Vodafone - Comparison of 3G offerings and retail outlets

3.2 Major mobile operators

3.2.1 Telecom Mobile

3.2.1.1 2G network

3.2.1.2 3G network

3.2.1.2.1 Overview

3.2.1.2.2 Products and services

3.2.1.2.3 Network development

3.2.1.2.4 Network upgrade - EVDO Revision A

3.2.2 Vodafone New Zealand

3.2.2.1 2G network

3.2.2.2 3G network

3.2.3 TelstraClear

3.2.3.1 Overview

3.2.3.2 TelstraClear to launch 3G network

3.2.4 Econet

3.2.4.1 Overview

3.2.4.2 3G network rollout developments

3.3 Market analyses - 2006

3.3.1 Mobile on the way to 4G

3.3.2 Mobile review in New Zealand

3.3.3 The confusing mobile market in New Zealand

3.3.4 Challenging road ahead for New Zealand mobile operators

3.3.4.1 New Zealand mobile market reaching saturation

3.3.4.2 Fixed-to-mobile substitution - a growing trend

3.3.4.3 3G will open up new niche revenue streams

3.3.4.4 Mobile networks not ideal for carrying data

3.3.4.5 Fixed-line players move into mobile operator’s territory

3.3.4.6 3G prices will drop forcing down ARPUs

3.3.5 Vindicated: 4G is arriving earlier

3.3.6 CDMA-based products on a steep decline in New Zealand and Australia

3.3.7 Analysis of MVNO developments

3.4 Market surveys - 2006

3.4.1 New Zealand mobile content market shows slow growth

3.4.2 Mobile pricing performance

3.4.3 Econet Wireless makes slow progress due to poor government regulation

3.5 Spectrum

3.5.1 Spectrum market and regulatory overview

3.5.1.1 Management Rights Regime

3.5.1.2 Impact of new technologies on spectrum usage

3.5.1.3 Licensed vs unlicenced spectrum

3.5.2 The Radiocommunications Act 1989

3.5.3 Market developments in 2006

3.5.3.1 New Zealand cellular spectrum review - July 2006

3.5.3.2 Expansion of spectrum allocation for wireless broadband

3.5.3.2.1 Update - July 2006

3.5.3.2.2 Update - November 2006

3.5.4 Market developments in 2005

3.5.4.1 Ultra-Wideband technology opportunities

3.5.4.2 Mobile spectrum developments

3.5.5 Unlicensed spectrum

3.5.6 Spectrum trading

3.5.7 Radio Frequency Identification (RFID)

3.5.7.1 Overview

3.5.7.2 New Zealand retailer explores implementation of RFID

4. BROADBAND MARKET

4.1 Overview and providers

4.1.1 Market overview

4.1.2 Broadband statistics

4.1.2.1 Local statistics

4.1.2.1.1 2006 statistics

4.1.2.2 Global statistics

4.1.2.3 Broadband and dial-up forecasts to 2011

4.1.2.3.1 Scenario 1 - slow broadband subscriber growth

4.1.2.3.2 Scenario 2 - higher broadband subscriber growth

4.1.3 Key market developments

4.1.3.1 Telecom upgrades broadband speeds

4.1.4 Market surveys

4.1.4.1 Roy Morgan survey

4.1.4.2 OECD survey on broadband adoption

4.1.4.3 Broadband service pricing performance

4.1.5 Broadband service providers

4.1.5.1 Telecom

4.1.5.2 TelstraClear

4.1.5.3 ihug

4.1.5.4 CallPlus

4.1.5.5 Woosh Wireless

4.1.5.6 Maxnet

4.1.5.7 CityLink

4.1.5.8 Wave Internet

4.1.5.9 Wired Country

4.1.5.10 ICONZ

4.1.5.11 Orcon Internet

4.1.5.11.1 Orcon to deploy ADSL 2+ high-speed broadband network

4.1.5.12 Reach Wireless

4.1.6 Technologies and solutions

4.1.7 Regional broadband initiatives

4.1.7.1 Introduction

4.1.7.2 Government’s Digital Strategy and Broadband Challenge initiative

4.1.7.2.1 Introduction

4.1.7.2.2 The Broadband Challenge

4.1.7.2.3 Broadband applications and grants issued - 2006

4.1.7.3 West Coast developments

4.1.7.4 Project Probe

4.1.7.5 E-regions

4.2 Wireless broadband

4.2.1 Market overview

4.2.2 WiFi

4.2.3 WiMAX

4.2.3.1 Overview

4.2.3.2 Market developments - 2006

4.2.3.2.1 nzwireless

4.2.3.2.2 National Communications

4.2.3.2.3 Compass

4.2.3.2.4 CallPlus and Slingshot

4.2.3.2.5 Woosh secures rights to WiMAX spectrum

4.2.3.2.6 Woosh partners with Hamilton for WiMAX network

4.2.3.2.7 Expansion of spectrum allocation for wireless broadband

4.2.3.2.8 CallPlus wins WiMAX spectrum allocation

4.2.4 Satellite

4.2.4.1 IPSTAR

4.2.4.2 ihug

4.2.4.3 ICONZ

4.2.4.4 Optus

4.2.4.5 PanAmSat

4.2.4.6 Government grants new satellite application New Zealand

4.2.5 Major players

4.2.5.1 Woosh Wireless

4.2.5.1.1 Overview and services

4.2.5.1.2 Acquisition of Quicksilver Internet

4.2.5.1.3 Strategy update - November 2006

4.2.5.1.4 Network rollout

4.2.5.1.4.1 Rights secured for WiMAX

4.2.5.1.5 Negotiations for trans-Tasman roaming rights

4.2.5.1.6 Subscribers and financial results

4.2.5.1.7 Technology overview

4.2.5.1.8 Company background

4.2.5.2 Broadcast Communications Ltd (BCL)

4.2.5.2.1 Launch of EXTEND wireless broadband service

4.2.5.3 Telecom’s wireless broadband services

4.2.5.3.1 Wireless hotspots

4.2.5.3.2 Other wireless broadband services

4.2.5.4 TelstraClear

4.2.5.5 Compass Communications

4.2.5.5.1 Wired Country

4.2.5.5.2 National Communications (NATCOM)

4.2.5.6 Reach Wireless

4.2.5.7 RoamAD

4.2.5.8 CityLink

4.2.5.9 ThePacific.Net

4.3 Analysis

4.3.1 The broadband market at the end of 2006

4.3.2 The Broadband Challenge (Digital Cities)

4.3.2.1 Warm fuzzy initiative

4.3.2.2 Where is the blueprint?

4.3.2.3 Not $24 million - $500 million is needed

4.3.2.4 Power to the cities

4.3.2.5 Ultimate solution is structural separation

4.3.2.6 Value-added infrastructure services

4.3.3 Boost for competition in New Zealand

4.3.3.1 More innovative services

4.3.3.2 Need for FttH infrastructure

4.3.3.3 Wake-up call for regional New Zealand

4.3.3.4 Does the Commerce Commission have the right powers?

4.3.3.5 Australia is facing implementation delays of six years

4.3.3.6 A can-do Telecom

4.3.4 Lies, lies and more lies - but from which side?

4.3.5 Brilliant tactics from Telecom

4.3.6 Old technology problems

4.3.7 Wireless questions

5. INTERNET AND ISP MARKET

5.1 Market overview and statistics

5.2 Market trends

5.2.1 ISP market will see further consolidation

5.2.2 Internet is the driver of the data market

5.2.3 Lower margins from broadband products

5.3 Market analysis

5.3.1 Revival of the ISP market

5.4 Where is the ISP market heading?

5.4.1 Triple play business models

5.4.2 VoIP

5.4.3 Broadband TV and IPTV

5.4.4 Internet media companies

5.5 Market surveys

5.5.1 Internet and broadband market survey - December 2005

5.6 Internet auctioning

5.6.1 Purchase of TradeMe by Fairfax New Zealand

5.7 Mobile banking

5.7.1 Kiwibank launches full service mobile banking

5.8 Historical statistics

6. DATA SERVICES

6.1 Market overview, analyses and trends

6.1.1 Introduction

6.1.2 Data market growth is accelerating

6.1.3 Internet is the driver of the data market

6.2 Data market statistics - 2006

6.3 Leased lines

6.3.1 Market survey - leased line performance

6.3.2 Market overview by Ministry of Economic Development

6.3.2.1 Introduction

6.3.2.2 Low-speed data links

6.3.2.3 High-speed data links

6.4 Data services - technologies

6.5 Global market trends and analyses

6.5.1 Data services will see a move to next generation technologies

6.5.2 Streaming video basis for broadband TV

6.5.2.1 What is it?

6.5.2.2 Streaming video in New Zealand

7. CONVERGENCE - TRIPLE PLAY MODELS

7.1 What is the triple play model?

7.2 The ABC of triple play - analysis

7.3 Infrastructure market

7.3.1 Content market

7.3.2 Appliances and services market

7.4 Triple play developments around the world

7.5 Triple play services in New Zealand

7.5.1 Telecom’s Next Generation Network

7.5.2 Triple play services and network rollouts in New Zealand

7.5.3 Video-over-IP broadcasting

7.5.4 Digital media analysis - where are the leaders?

7.6 Converging media services

7.6.1 Media centres in the home

7.6.2 Flat screen TVs

7.6.3 DVRs

7.6.4 DSL TV (IPTV)

7.7 Streaming video basis for broadband TV

7.7.1 What is it?

7.7.2 Streaming video in New Zealand

7.8 Market statistics - 2005

7.8.1 Triple play pricing

7.8.2 International benchmarking

7.9 Telcos - losers in the march of progress

7.9.1 Incumbent telcos and media companies - the cracks are appearing

7.9.2 Traditional businesses models are done for

7.9.3 Structural reforms are the only way forward

7.9.4 Keep an eye on BT and Internet companies

7.9.5 The Internet is rapidly becoming a national asset

7.10 Google takes on the media giants

8. BROADCASTING

8.1 Market overview

8.2 Free-to-Air (FTA) TV

8.2.1 Television New Zealand (TVNZ)

8.2.2 CanWest MediaWorks NZ

8.2.2.1 TVWorks - TV3 and C4

8.2.2.2 Company history

8.2.3 Prime Television New Zealand

8.2.3.1 Company history

8.2.4 Totaliser Agency Board (TAB)

8.3 Digital Free-to-Air (FTA) TV

8.3.1 State of play in late 2006

8.3.2 Government gives go ahead for digital TV rollout

8.3.3 Kordia’s digital TV rollout

8.4 Pay and cable TV (digital)

8.4.1 Market overview

8.4.2 Sky Network Television

8.4.2.1 Overview

8.4.2.2 SKY subscriber statistics

8.4.3 TelstraClear Saturn

8.4.4 Ethnic TV company to launch digital subscriber TV

8.4.5 Analysis of the pay TV market - October 2006

8.4.5.1 On paper SKY’s financial performance is strong yet again

8.4.5.2 Exorbitant prices places a ceiling on further pay TV market growth

8.4.5.3 Striking similarities exist with the Australian marketplace

8.4.5.4 Telecom’s market dominance only adds fuel to the fire

8.4.5.5 Lack of competition only stifles market innovation and consumer choice

8.5 Video-over-IP broadcasting

8.6 Digital radio

8.6.1 Digital Audio Broadcasting (DAB)

8.6.1.1 Kordia

9. GLOSSARY OF ABBREVIATIONS

LIST OF TABLES

Table 1 - Country statistics - 2006

Table 2 - Telecom revenue statistics - 2006

Table 3 - Telephone network statistics - 2006

Table 4 - Internet provider statistics - 2006

Table 5 - Internet user statistics - 2006

Table 6 - Broadband statistics - October 2006

Table 7 - Mobile statistics - June 2006

Table 8 - Broadcasting statistics - Pay TV and FTA TV - 2006

Table 9 - Mobile subscribers, annual change and penetration - 1995 - 2008

Table 10 - Mobile subscribers per operator and network - 2001 - 2007

Table 11 - Annual change in mobile subscribers per operator - 2002 - 2007

Table 12 - Market share of mobile subscribers per operator - 1995 - 2007

Table 13 − Percentage of prepaid customers per operator − 2005 - 2006

Table 14 − New Zealand 3G subscribers by operator− 2006

Table 15 - Telecom Mobile total call minutes and annual change - 2005 - 2006 18

Table 16 - Mobile market revenues by operator - 1997 - 2008

Table 17 - Mobile market revenue growth by operator - 1998 - 2008

Table 18 - Mobile market revenue market share by operator - 1997 - 2007

Table 19 - Monthly ARPU per operator - 2004 - 2006

Table 20 - Annual change in monthly total ARPU share per operator - 2005 - 2006

Table 21 - Mobile ARPU per operator and annual change - January 2006

Table 22 - Telecom’s mobile market revenue and growth - 2004 - 2005

Table 23 - Vodafone network cell sites - October 2006

Table 24 - Vodafone Group subscriber and revenue growth - New Zealand vs selected countries - 2005 - 2006

Table 25 - Pricing performance for mobile services - 2005*

Table 26 - Broadband subscribers by major provider- wireless and fixed-line access - 2004 - 2006

Table 27 - Total residential broadband subscribers by major provider - 2003 - 2006

Table 28 - Annual growth of residential broadband subscribers by major provider - 2004 - 2006

Table 29 - Percentage breakdown of residential subscribers per provider - 2004 - 2006

Table 30 - Telecom NZ, retail and business broadband subscribers - 1999 - 2006

Table 31 - Telecom NZ broadband subscribers (residential, business) & (wholesale, retail) & annual change - 2005 - 2006

Table 32 - Average maximum broadband speeds - 2006

Table 33 - Broadband & dial-up residential subscriber forecasts - low market growth scenario - 2003 - 2011

Table 34 - Broadband & dial-up residential subscriber forecasts - high market growth scenario - 2003 - 2011

Table 35 - Percentage of New Zealand homes with dial-up, broadband or Internet connection - 2004 - 2006

Table 36 - Percentage of New Zealand homes with broadband connection by city - 2004 - 2006

Table 37 - Woosh customer base - 2005 - 2006

Table 38 - Woosh revenue and annual change - 2004 - 2005

Table 39 - Woosh operating profit / (loss) - 2004 - 2005

Table 40 - Estimated number of ISPs - 1995 - 2008

Table 41 - ISP revenue estimates and annual change - 2002 - 2008

Table 42 - Dial-up subscribers per major ISP - 2002 - 2007

Table 43 - Dial-up subscribers per ISP - annual growth - 2003 - 2007

Table 44 - Dial-up subscribers per ISP - market share - 2002 - 2006

Table 45 - Telecom’s Xtra dial-up subscribers - 1997 - 2006

Table 46 - New Zealand & Australia - Internet, broadband pay TV, mobile & fixed-line penetration - 2001; 2004 - 2005

Table 47 - ISP revenue estimates (historical) - 1998 - 2001

Table 48 - Internet user and penetration statistics - 2004

Table 49 - Dial-up Internet subscribers per major ISP (historical) - 1998 - 2001

Table 50 - New Zealand data market revenues by sector - 2004 - 2007

Table 51 - New Zealand data market percentage growth by sector - 2005 - 2008

Table 52 - New Zealand data market percentage breakdown by sector - 2005 - 2007

Table 53 - Telecom NZ data revenue by sector and annual change - 2005 - 2006

Table 54 - Telecom NZ data revenue percentage by sector - 2005 - 2006

Table 55 - Data services - projected revenue changes by service category - 2005 - 2010

Table 56 - New Zealand triple play pricing - 2005

Table 57 - Percentage of operators globally offering unlimited nationwide fixedline calls - 2005

Table 58 - Triple play pricing with per-minute call charges - 2005

Table 59 - Double play pricing (voice and data) with per-minute call charges - 2005

Table 60 - Bit caps and corresponding service limits from off-network sources - 2005

Table 61 - FTA TV broadcasting statistics - 2006

Table 62 - Pay TV broadcasting statistics - June 2006

Table 63 - Total UHF, DBS & other subscribers - 2003 - 2006

Table 64 - Subscriber growth and annual change - 1993 - 2007

Table 65 - Average monthly revenue per residential subscriber and annual change - 2004 - 2006

LIST OF EXHIBITS

Exhibit 1 - Skype hacked by Telecom?

Exhibit 2 - Comparison of New Zealand’s mobile networks

Exhibit 3 - Comparison of 3G offerings from Telecom and Vodafone

Exhibit 4 - Telecom and Vodafone - number of retail outlets by distributor - 2006

Exhibit 5 - Vodafone HSDPA rollout timeframe & corresponding download speeds- 2006 - 2007

Exhibit 6 - The high cost of New Zealand mobile services - 2006

Exhibit 7 − Interesting spectrum developments

Exhibit 8 - Broadband service providers - 2006

Exhibit 9 - Why the average home will soon require 50Mb/s to the home

Exhibit 10 - Service parameters for residential broadband services

Exhibit 11 - Pricing performance for broadband services - 2004

Exhibit 12 - Pricing performance for leased line data services - 2005

Exhibit 13 - Access technologies

Exhibit 14 - Telecom convergence

Exhibit 15 - SKY Network Television at a glance - 2006