What is Two-Part Tariff

New Zealand offers a through-provoking case study of the effects of different competition and regulatory policies on broadband diffusion rates. Despite having one of the highest rates of Internet connection and usage in the OECD, widely available broadband infrastructure, and low broadband prices, broadband uptake per capita languishes in the bottom third of the OECD. While low uptake has typically been attributed to competition and regulatory factors associated with New Zealand’s ‘light-handed’ regulatory regime, this chapter proposes that a more credible explanation lies in a combination of New Zealand’s legacy of demand-side regulations, in particular the retail tariff options for voice telephony, and the limited value being derived by New Zealand residential consumers from the small range and narrow adoption of applications used currently that necessitate broadband connections. The New Zealand case illustrates the effect that legacy regulations can have on both the diffusion of new technologies per se and the choices made by consumers between different generational variants within that technology. The case indicates a need for more research on the effect of telecommunications industry regulations on demand-side uptake factors.