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Critique of OECD broadband methodology flawed

Analysis of New Zealand broadband data incorrect

AUCKLAND, NEW ZEALAND, 24 April 2007 – The recently released report from the Australian consultancy firm Market Clarity criticising the OECD broadband ranking contains a number of errors in its interpretation of New Zealand Internet statistics, according to Network Strategies, the New Zealand-based telecommunications consultancy.

The Market Clarity report, Broadband Wars: The OECD's International Broadband Arms Race (15 May 2007) examines the OECD’s methodology for its analysis of broadband statistics, however Market Clarity incorrectly uses New Zealand data, leading to erroneous conclusions on the availability and penetration of high speed broadband connections in New Zealand.

Market Clarity incorrectly states, in Figure 4 (“Broadband Speed Distribution by Country”), that 59.4% of New Zealand broadband connections have a download speed of less than 256kbit/s, and the remaining 40.6% have a download speed of between 256kbit/s and 511kbit/s. The former figure is also repeated in Table 3 of the report. While Market Clarity has used data from Statistics New Zealand, the interpretation of that data is flawed.

The correct figure is a significantly smaller 8.2% of broadband connections having a download speed of less than 256kbit/s.

Furthermore, Market Clarity has assumed that in the case of New Zealand the “greater than 256kbit/s” also means “less than 512kbit/s”. Statistics New Zealand did not publish detailed data on higher speed broadband connections, but did state that the third and fourth most common levels of upload speeds were 512kbit/s to 2Mbit/s and 2Mbit/s to 10Mbit/s.

Our analysis of the original Statistics New Zealand data

The data used by Market Clarity is taken from Statistics New Zealand’s report on the September 2006 ISP survey, updated in March 2007 (available at http://www.stats.govt.nz). However key data from the Statistics New Zealand survey include:

  • there are 771,100 “analog” Internet subscribers (including dial-up and ISDN), and 661 660 “non-analog” (or broadband) subscribers, totalling 1,382,700 Internet subscribers
  • 821,200 subscribers have a download speed of less than 256kbit/s – 59.4% of total subscribers. Therefore there are 561,500 subscribers (40.6% of the total) with a download speed of greater than 256kbit/s.

If we assume that all “analog” subscribers have a download speed of less than 256kbit/s, then 50,100 “broadband” customers have speeds of less than 256kbit/s – 8.2% of the 661,660 broadband subscribers. Therefore 91.8% of broadband subscribers have connection rates of greater than 256kbit/s, rather than the 40.6% quoted by Market Clarity.

Market Clarity’s subsequent findings incorrect for New Zealand

The error in speed classification for New Zealand is carried through into estimates used in further analysis later in the report, for example Table 6 (“Total Number of Broadband Subscribers by Country, Above 256kbit/s”) and Figure 10 (“Broadband Penetration per 100 Inhabitants, Above 256kbit/s”), where New Zealand's ranking may need to be adjusted once the data is corrected.

By comparing adjusted Statistics New Zealand broadband Internet connection numbers with OECD data for June 2006, Market Clarity also concludes that there are almost 65,000 connections missing from the OECD count. Our analysis shows that this discrepancy is most likely due to Statistics New Zealand’s inclusion of mobile data subscriptions in the “broadband” count. Mobile data subscriptions in New Zealand are second only to ADSL connections in the count of “non-analog” Internet connections, exceeding fixed wireless and satellite. The OECD specifically excludes mobile data (3G or other) from its broadband connection count.

In addition, Market Clarity's analysis of de-facto residential entry-level broadband plans, in Figure 5 of the report, shows New Zealand with an entry-level speed of 128kbit/s. This appears to be a misunderstanding of Telecom New Zealand's “Beginner” and “Every Day” plans which actually have unlimited download speed, but limit upload speed to 128kbit/s.

When reviewing the international OECD broadband figures and methodologies, Market Clarity has misinterpreted information concerning the New Zealand market. This error may have an impact on its subsequent conclusions concerning the validity of the OECD reporting of the New Zealand broadband market. At this stage, it is not clear if similar misunderstandings extend to Market Clarity’s analysis of broadband markets in other countries.

Network Strategies is undertaking a full review of the report.

After the release of the above comments, Market Clarity subsequently updated its report, with the New Zealand data on distribution by downstream bandwidth, and the bandwidth of entry level plans (as discussed above) corrected. The New Zealand data used by Market Clarity still includes mobile data subscriptions. This revised report, dated 23 May 2007, is now available from Market Clarity.

About Network Strategies

Network Strategies works at the forefront of the telecommunications revolution, delivering advice and insight to operators, manufacturers and governments. From offices in Auckland, London, Melbourne and Wellington, Network Strategies staff provide strategic consultancy to clients throughout the Asia-Pacific region, Europe and North America, offering a complete global outlook on key issues affecting all players in the telecoms sector.

Media contacts

New Zealand:
Suella Hansen
Tel: +64 9 522 1702
E-mail: s.hansen@strategies.nzl.com
Australia:
Noelle Jones
Tel: +61 3 9830 0152
E-mail: n.jones@strategies.nzl.com

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