1. Consumer Behaviour in New Zealand Telecommunications Market – Demand Side Study Please direct any queries to Jonathan.Hackett@roymorgan.com Roy Morgan Research – Level 5, 52 Swanson St, Auckland 1010 Telephone: (09) 912 7032 © Roy Morgan Research Prepared for “The Future with High Speed Broadband: Opportunities for New Zealand” Conference February 2012

2. © 2011 Written approval must be obtained from Roy Morgan Research before circulation or publication of this data outside the client’s institution. www.roymorganonlinestore.com 2 Content Introduction3 Survey details4 Broadband satisfaction5 Interest in new services6 Willingness to pay8 Barriers to uptake11 Key messages13 Appendix15

3. © 2011 Written approval must be obtained from Roy Morgan Research before circulation or publication of this data outside the client’s institution. www.roymorganonlinestore.com 3 Introduction The New Zealand Commerce Commission is conducting a study into the demand for high speed broadband. The study aims to identify issues that might affect the uptake of high speed broadband in New Zealand. Further information about the study is available at: http://www.comcom.govt.nz/high-speed-broadband-services-demand-side-study/ As part of this study, Roy Morgan Research was commissioned to undertake a survey on aspects of consumer demand for high speed broadband, including: Satisfaction with current broadband services Interest in new services that would be enabled by high speed broadband Willingness to pay for high speed broadband Barriers to uptake of high speed broadband Consumer understanding of key broadband characteristics Sources of information on the potential benefits of high speed broadband

4. © 2011 Written approval must be obtained from Roy Morgan Research before circulation or publication of this data outside the client’s institution. www.roymorganonlinestore.com 4 Methodology: The Single Source methodology is both a mail-out questionnaire as well as a short Computer Assisted Telephone Interview (CATI). The customised questionnaire was carried out using a CATI methodology from Roy Morgan’s call centre in Melbourne. Time period: The fieldwork for the customised questionnaire was carried out between October 17th and November 4th, 2011. Qualifying Respondents: The qualifying respondents for the customised questionnaire had to meet all of the following criteria: Single Source recontacts from May 2010 – April 2011 Has a fixed line at home Has a mobile phone Has broadband Internet account was included on last home telephone bill Quotas and weighting: Age by gender by North/South Island quotas were implemented for this project. The sample was also post-weighted to account for an urban/rural split. This allowed us to obtain a nationally representative sample. Sample size: The final sample size for the customised questionnaire was 1,053. Survey Details

5. © 2011 Written approval must be obtained from Roy Morgan Research before circulation or publication of this data outside the client’s institution. www.roymorganonlinestore.com 5 Broadband satisfaction Thinking about your current broadband internet service, please tell me how satisfied you are with the following? There is widespread satisfaction amongst NZ connected consumers with most aspects of current broadband services. There are no significant regional differences in satisfaction levels. Base: Has broadband, n=1,037 base for coverage on mobile phone: has broadband on mobile phone, n=351 Satisfied Neither satisfied nor unsatisfied Unsatisfied Can’t say

6. © 2011 Written approval must be obtained from Roy Morgan Research before circulation or publication of this data outside the client’s institution. www.roymorganonlinestore.com 6 Interest in new services How interested, on a scale from 1 to 10, might you be in subscribing to each service, assuming that it was not too expensive? Greatest interest amongst NZ connected consumers is in HD movies & TV on demand and in real time education. There are no significant regional differences in interest in new high speed broadband services. Base: Has broadband, n=1,037 Interested Neither interested nor uninterested Uninterested Can’t say

7. © 2011 Written approval must be obtained from Roy Morgan Research before circulation or publication of this data outside the client’s institution. www.roymorganonlinestore.com 7 Interest in new services Base: Has broadband, n=1,037 Interest in new services is greater amongst the youngest respondents and declines amongst the older respondents. However, the exception is the doctor’s consultation over the internet (refer to the blue bar). Women are more interested in HD virtual real time education than men, while men are more interested in HD interactive gaming. By AgeBy Gender HD Movies and TV on demand over broadbandHD virtual real time education HD Video conference calls over broadbandA doctor’s consultation over the internet HD interactive gaming How interested on a scale from 1 to 10, might you be in subscribing to that service, assuming that it was not too expensive?

8. © 2011 Written approval must be obtained from Roy Morgan Research before circulation or publication of this data outside the client’s institution. www.roymorganonlinestore.com 8 Willingness to pay How much more than you currently pay per month, would you be willing to pay for broadband internet that enabled you to use these services? There is a limited willingness to pay much more for high speed broadband, with only 19% of NZ connected consumers willing to pay over $10 more per month. Base: Has broadband, n=1,037 Up to $5 more per month $5 to $10 more per month $11 to $20 more per month Over $20 per month Can’t say

9. © 2011 Written approval must be obtained from Roy Morgan Research before circulation or publication of this data outside the client’s institution. www.roymorganonlinestore.com 9 Willingness to pay By AgeBy Gender Willingness to pay for high speed broadband declines amongst the older age groups. This ties into the fact that the 50+ New Zealanders are less interested in new high speed broadband services and spend less time on average using the internet than the younger New Zealanders. Men are more willing to pay a higher amount for high speed broadband than women. This ties into the fact that men spend more time using the internet than women on average. Base: Has broadband, n=1,037 Up to $5 more per month $5 to $10 more per month Over $10 more per month Can‘t Say How much more than you currently pay per month, would you be willing to pay for broadband internet that enabled you to use these services?

10. © 2011 Written approval must be obtained from Roy Morgan Research before circulation or publication of this data outside the client’s institution. www.roymorganonlinestore.com 10 Consumers in Auckland, Wellington and Christchurch are willing to pay a higher amount for high-speed broadband that enables them to use these new services. This ties into the fact that people in these cities earn a higher income on average than those in provincial and rural areas. By region Willingness to pay People interested in at least one new service are willing to pay more for high-speed broadband that enables them to use these new services. By interest in new services Interested Not interested Base: Has broadband, n=1,037 Base: Has broadband, and either interested in at least 1 or not interested in any n=882 Up to $5 more/month $5 to $10 more/month $11 to $20 more/month Over $20 more/month Can’t say Up to $5 more per month $5 to $10 more per month Over $10 more per month Can‘t Say How much more than you currently pay per month, would you be willing to pay for broadband internet that enabled you to use these services?

11. © 2011 Written approval must be obtained from Roy Morgan Research before circulation or publication of this data outside the client’s institution. www.roymorganonlinestore.com 11 Barriers to uptake If you were to find that having broadband that enabled you to use these services would require one or more of the following, to what extent would these be a barrier? Barriers that involve additional costs are the most significant for NZ connected consumers. There are no significant regional differences in barriers to uptake. Base: Has broadband at home, n=1,035 Significant barrier Minor barrier Not a barrier Can’t say

12. © 2011 Written approval must be obtained from Roy Morgan Research before circulation or publication of this data outside the client’s institution. www.roymorganonlinestore.com 12 Barriers to uptake Disruption of rewiring premises is more significant a barrier to female NZ connected consumers than to males. This ties into the fact that women in NZ are more “house proud” than men.* Low monthly data caps are not as significant a barrier to respondents over the age of 50 as to the younger ones. This ties into the fact that New Zealanders over the age of 50 spend much less time using the internet. * Single Source data shows that 49% of NZ women agree with the statement “I can’t relax until I know the house is clean and tidy” compared to 29% of NZ men agreeing with this. Base: Has broadband at home, n=1,035 By Age By Gender Cost of rewiring premises Disruption of rewiring premises Upgrading IT equipment Changing service provider Paying a penalty Low monthly data caps If you were to find that having broadband that enabled you to use theses services would require one or more of the following, to what extent would these be a barrier?

13. © 2011 Written approval must be obtained from Roy Morgan Research before circulation or publication of this data outside the client’s institution. www.roymorganonlinestore.com 13 Key messages – New Zealand Consumers Broadband satisfaction NZ connected consumers have expressed widespread satisfaction with most aspects of their current broadband services. A slightly lower level of satisfaction in the provincial and rural areas is driven by lower satisfaction levels of data caps and the time taken to download/upload files. New broadband services HD movies and TV on demand as well as HD virtual real time education are likely to be the greatest drivers to uptake. This is particularly true for connected consumers under the age of 50.

14. © 2011 Written approval must be obtained from Roy Morgan Research before circulation or publication of this data outside the client’s institution. www.roymorganonlinestore.com 14 Key messages – New Zealand Consumers Willingness to pay NZ connected consumers have shown a limited willingness to pay for high speed broadband that enables them to use these new services. Willingness to pay declines amongst the older age groups. Barriers to uptake NZ connected consumers have identified several barriers to high speed broadband uptake. The most significant barriers are those that involve additional costs. This includes both one-off costs, as well as ongoing costs. There are also differences when looking at the gender and age split, with connected consumers under 50 being more concerned with data caps and female connected consumers being more concerned with the disruption of rewiring the premises.

15. © 2011 Written approval must be obtained from Roy Morgan Research before circulation or publication of this data outside the client’s institution. www.roymorganonlinestore.com 15 Thank you! For further information, please contact: Jonathan Hackett Email: jonathan.hackett@roymorgan.comjonathan.hackett@roymorgan.com Tel: (09) 912-7032

16. © 2011 Written approval must be obtained from Roy Morgan Research before circulation or publication of this data outside the client’s institution. www.roymorganonlinestore.com 16 Understanding of Broadband Characteristics Understood precisely Understood a little Didn’t understand Can‘t Say Thinking of all your recent experiences with broadband, please say whether you understood the following characteristics of your broadband usage experience Data caps, maximum and minimum speeds were largely understood, while latency and jitter were generally not understood. Base: Has broadband, n=1,037

17. © 2011 Written approval must be obtained from Roy Morgan Research before circulation or publication of this data outside the client’s institution. www.roymorganonlinestore.com 17 Source of Information on Potential Benefits of High-Speed Broadband Base: Has broadband, n=1,037 If you wanted to get information about the potential benefits of faster broadband services, where or from whom would you seek it? The most popular place to seek information on the potential benefits of high-speed broadband is the internet, followed by internet service providers. Advertising is quite unpopular. Younger broadband users are more likely to use the internet as a source of information, whereas older broadband users are more likely to ask their Internet Service Providers.