A study conducted by Sydney based telecommunications specialist Market Clarity has found that Australian and New Zealand Internet Service Providers (ISP) pay comparable costs for services such as domestic international IP Transit.

 

The study, which is based on interviews with retail ISPs on both sides of the Tasman, found that Australian ISPs devote more average revenue per users (ARPU) to wholesale service costs (such as ADLS access services, domestic backhaul and IP transit) than their counterparts in New Zealand.

 

“There is a widespread perception, particularly in New Zealand, that the costs of international services drive the difference between the allowances offered Australian and New Zealand broadband customers,” Market Clarity CEO Shara Evans said.

 

“However, our research suggests that other factors are more significant. These might include the different domestic regulatory regimes in the two countries, and the competitive pressure brought about by Australia’s much larger number of retail ISPs.”

 

After all costs are taken into account, the research found that Australian retail broadband ISPs retain a median profit markin of 26.3 percent of ARPU, while New Zealand ISPs have posted a median margin of 38.8 per cent of their ARPU.

 

“Our interviews with ISPs in Australia and New Zealand also revealed different concerns about what might prevent business growth in the future,” Ms Evans said. 

“In Australia, ISPs are concerned at aspects of the NBN pricing model. In particular, they are worried that the NBN’s CVC pricing could emerge as a future constraint to growth in customer allowances. ISPs are also worried about the large number of NBN POIs (Points of Interconnect).

“However, New Zealand ISPs were more likely to nominate lack of consumer access to content as holding back growth.

“Although some New Zealand respondents to our study said their broadband growth is constrained by factors like IP Transit costs, this was not corroborated by our comparison of their cost base relative to Australian providers,” Ms Evans said.

 

The study can be found here