Leased Line Data Services Pricing

  • Maurice Williamson

Telecommunications lines in New Zealand are comparatively expensive according to a report commissioned by the Ministry of Commerce. The report shows that, even after the recently announced price cuts, leased lines in New Zealand are the most expensive of the countries analysed.

Communications Minister, Maurice Williamson says that he is disappointed and will be writing to Telecom seeking an
explanation for the high prices faced by New Zealand businesses for their leased lines.

"The silver lining, however, is that with prices like these in the marketplace it is very attractive for other telecommunications players to offer competing services" he said. "That is already starting with the arrival of CityLink in Wellington, who offer high capacity links at prices much lower than these. I look forward to similar initiatives in other areas."

The report, by independent consultancy Amos Aked Swift, analyses the costs of leased lines at various capacities and lengths in New Zealand, Australia, Sweden, the UK and the US state of Colorado. (These countries were chosen because they are either trading partners or have demographic similarities to New Zealand.)

Analysis of the prices of different types of leased lines shows that New Zealand is the most expensive country of those surveyed in which to buy four of the eight types of lines analysed across each country. Australia is the most expensive for the other four. Taken together across all the line types, New Zealand prices were 8% higher than Australian prices, 54% higher than the average across all five countries and almost three times those of the US.

As well as offering direct comparisons of similar leased lines among the five countries, the report compares the prices faced by six "national businesses" including a school and a hospital in each country.

For each national business analysed, Australia and New Zealand were the two most expensive countries. In four out of six cases, New Zealand business faced higher prices than their Australian counterparts.

Across all the national businesses taken together, leased lines in New Zealand are 50% more expensive than the average of all countries surveyed and 8% more expensive than Australia. New Zealand prices are three times more expensive than those in the US.

This report follows a similar one last year on the subject of ISDN pricing, which found that New Zealand prices were high compared with the same list of overseas countries. New Zealand ISDN prices have not changed since that report.

This report, and last years ISDN one, are available on the Internet at Hard copies are available from Colin Jackson at the Ministry of Commerce, telephone 04 472 0030.