Commerce Commission urged to reduce internet charges

Commerce Commission urged to reduce internet charges

7 May 2015

Spark New Zealand launches campaign to help the public have their say

The Commerce Commission is being asked to justify why New Zealand wholesale internet charges need to be set at levels massively out of line with comparable countries.

The Commission is in the final stages of setting the wholesale charge for accessing the Chorus copper broadband network, so Spark New Zealand has launched the campaign to give the public a say.

Because Chorus has a monopoly on the copper network, which 95 percent of New Zealanders still rely on for their landline and broadband, the Commission sets what Chorus can charge service providers, including Spark, to connect their customers to the internet.

“Spark has been working to give customers more value in their broadband plans. However, the Commerce Commission is proposing to increase what Chorus can charge to access their network, which is already pushing up the price everyone pays,” says Spark New Zealand Managing Director Simon Moutter.

“The proposed Chorus charges are almost 80 percent higher per line than the median charge of comparable countries – that’s up to $180 more per year. We think that’s not on and that Chorus charges should actually be reduced.”

Spark New Zealand has established a website where the public can find out more information about what makes up the price of broadband, as well as easily send a submission to the Commerce Commission asking them not to increase the Chorus monopoly charges for broadband.

The value in broadband plans has improved enormously in the last few years. Consumers are getting more data and faster speeds at lower prices. What you get in a basic broadband plan today for $79 (phone and 40Gb data) would have cost $105 in December 2012, $129 five years ago, over $700 per month in 2005, and over $13,500 per month in 1999. Internet users can also get a $99 Unlimited data plan, which was not even available when the Commission started the price setting process.

“The value people are getting from their broadband plans has been increasing, the Commission shouldn’t start pushing wholesale charges back up. It needs to justify why higher internet charges are in the best interests of consumers.”

“This is important because around half of what everyone pays is the wholesale Chorus charge – so any increase has a big impact on the final price for Spark customers, and for customers of all internet service providers.”

Last December, the Commerce Commission indicated its intention to increase Chorus access charges by around $5 and refused to rule out backdating the increase. As a consequence, in February this year Spark put up most plans by $4, and other internet service providers also increased prices.

“Spark has given a written undertaking to the Commission that if they decide not to backdate any increase in Chorus charges, we will pass the value of our related retail price increases back to our customers in a fair and transparent way,” says Mr Moutter.

“If the Commission goes on to reduce charges, given the amount of competition in the market, our customers can be confident that any reductions will mean more value in their plans. We’ve already reduced price of broadband in recent years and increased value by, for example, shouting our customers Lightbox for 12 months.

“The reason we have launched the campaign is to give the public a say in what is a complex regulatory process, because the outcome will impact every internet user. Spark is working to give our customers more value and the Commerce Commission needs to justify to ordinary internet users why they’re pushing charges up to levels well above comparable countries.”

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Contact for further comment

Conor Roberts
Head Public Affairs, Spark New Zealand
027 124 6004

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