A measure of market trends

“The market share of the incumbent provider, Spark, has decreased over the last five years. Energy bundlers such as Mercury have entered the broadband market over this period and begun to increase their market shares as consumer preference for energy bundles has increased,” the commission said in its annual market monitoring report, released in June.

“In the rural market, LEO (low-Earth orbiting) satellite provider Starlink has seen considerable growth since its entry in 2021,” the commission said.

The commission’s June report said Starlink customers had increased 57% from 37,000 to 58,000 over the past year, accounting for 19% of the rural market and 2% overall.

Starlink owner SpaceX was beneath the levy’s $10m threshold in 2023.

In 2024, SpaceX’s qualifying New Zealand revenue – that is, revenue generated from telecommunications services – was $73.79m as it debuted on the levy charts.

This year, SpaceX’s qualifying revenue jumped 38% to $100.99m.

(SpaceX’s slower revenue growth than customer growth is presumably down to Starlink supplementing its $159-a-month household plan with a slower $79-a-month option.)

The period has also seen Sky TV enter the telco market with broadband plans, with a slow but steady rise.

Last year, Sky had $52.38m in revenue to which the levy could be applied. This year, it was $60.13m as the pay TV provider reported a 4% increase in broadband customers to 50,867.

Overall, telco revenue tracked for the commission’s levy calculations is up this year to $4.9b from $4.8b last year.

Spark share slides

As the UFB rollout wrapped up, Jarden’s Arie Dekker predicted that the “Other category” could grow to include hundreds of thousands of customers due to the new fibre setup making it easier for a power company or pay-TV provider to offer internet.

That seems to be playing out (with the addition of Starlink, too).

And it seems to have impacted the largest player the most.

Spark, which had 32.86% of industry-qualified revenue in the year to June 2021, had dropped to 28.87% by last year and 21.17% this year.

One NZ, Chorus and 2degrees all saw modest increases in their actual revenue this year (see table below), but Spark fell back.

And the field of alternative players just got bigger.

Mercury and Contact are now the fourth and fifth largest retail internet providers in New Zealand, the commission says, having doubled their market share from 6% to 13% over the past five years.

Last month, Genesis Energy joined them, launching its own bundled broadband plans.

It’s a nuanced picture. Sky and Genesis could have created their own retail broadband services from scratch, but both minimised risk by partnering with 2degrees, which manages their services behind the scenes (Contact partners with wholesale specialist Devoli, one of many wholesale and infrastructure firms that also feature on the tables below).

Starlink, Starlink, Starlink

Starlink has multiple lines of business in New Zealand.

At present, Starlink is the only LEO (low-Earth orbiting) satellite constellation providing commercial broadband coverage to New Zealand, which can be accessed by a dish on the roof of your home, business, bach or boat (although within months it’s expected to face competition from the Amazon-owned Project Kuiper).

Since December last year, One NZ has been Starlink’s exclusive partner for its Direct to Cell service, which lets you send a text (and soon, if all goes to plan, make a voice call) via satellite to a regular smartphone, providing 100% coverage if you’ve got line-of-sight to the sky.

One NZ paid an undisclosed sum for its Starlink Direct to Cell exclusivity – and for an unspecified amount of time. But industry insiders widely expect Spark to be named the second local Starlink Direct to Cell partner in the New Year (2degrees also has a satellite-to-mobile deal in the works but with newcomer AST SpaceMobile).

The commission refused to break out revenue associated with the One NZ-Starlink deal. It said that Musk’s firm had been co-operative, supplying financials for its overall New Zealand business.

Starlink also provides a business-grade product, which involves a much larger, high-gain dish and costs up to $1015 per month. While the residential version of Starlink is DIY, Spark, OneNZ and 2degrees are all reseller partners for the business version.

Network for Learning, the Crown-owned company responsible for connecting the 2500 or so state schools, has a contract with Starlink to provide connectivity for rural schools.

And Air New Zealand inked a deal for Starlink to provide internet – wifi that’s actually fast and usable – on its planes.

At Spark’s annual meeting this month, a shareholder asked “How will Elon Musk’s Starlink affect Spark in the long term, and what’s the strategy for that?”

“Starlink has a role to play in New Zealand in terms of rural connectivity where fibre or copper or sometimes even mobile is unavailable,” chairwoman Justine Smyth replied.

“If you think about the progress it’s made in [New Zealand] over the last three years with broadband, it’s about 53,000 connections. In the context of maybe 1.7 million households, we have around 660,000. Starlink has a complementary role.”

Spark’s peers have taken a similar stance, painting Starlink as a remote rural option.

But Musk’s firm has also leaflet-dropped in central Auckland city suburbs and targeted urban dwellers.

And while Spark might see Starlink nibbling around the edges, the newcomer is also putting pressure on dozens of small wireless internet service providers in the provinces. It was blamed for the recent collapse of Evolution Networks in the Bay of Plenty.

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.