New Zealand internet service providers considered the country's regulatory environment less of a concern today than they did two years ago, before the operational separation of incumbent Telecom New Zealand, a survey has revealed.
In 2006 NZ Communications Minister David Cunciffe announced legislation reforms which would eventually see Telecom NZ split up into three segments.
Then, 53 per cent of ISPs surveyed by Statistics New Zealand believed that the regulatory environment was a barrier to growth. It was the obstacle named second-most frequently after strength of competition, which 79 per cent of ISPs named as a problem for expansion.
In March this year, however, only 40 per cent of ISPs believed the regulatory environment to be a barrier, behind strength of competition at 55 per cent, cost of international bandwidth at 50 per cent, and financing trouble at 40 per cent.
It was also in March this year that Telecom New Zealand faced its separation day, in which the separation of its network, wholesale and retail segments became legally enforceable.
Ovum telecommunications analyst David Kennedy put the increased confidence in regulation down to three factors: the separation, the unbundling of the local copper loop, and the introduction of a regulated wholesale market.
He was, however, surprised that the reduction in the number of ISPs considering the regulatory environment to be a barrier to growth wasn't larger, since in his opinion the country's telco regulation has seen major change. "I'm a little surprised that it's still as high as 40 per cent," he said.
"What it could reflect is that many of these changes have had little time to take effect yet," he surmised.
From March 2006 to March 2007 the number of ISPs considering regulation a barrier to growth dropped to 42 per cent, but it rose again in September 2007 to 47 before dropping to 40 per cent in March.
Kennedy said that this could show the ISPs' disillusionment after changes didn't occur as quickly as they wanted them to. When the changes finally flowed through, the disillusionment left.
"You really are surveying people's subjective opinion," he said.
Other barriers to growth mentioned by ISPs were delays in obtaining facilities from the backbone supplier, ability to attract and retain experienced or qualified personnel, cost of dial-up lines, access to markets, and the ability to source and use technology.
The report also showed that although the number of New Zealand internet subscribers has been increasing, with 1,282,800 residential subscribers at 31 March 2008, the growth rate from half year to half year has hit its lowest point for two years, hitting 1.6 per cent.