Spark hints of price increases following higher Chorus wholesale charges

Spark New Zealand said it was undertaking an urgent review of all broadband and fixed voice customer pricing following the announcement by the Commerce Commission of proposed new wholesale rates that Chorus charges retail service providers, including Spark.

“Today’s announcement is unexpected and we are now facing costs approximately $60 million a year higher than we previously anticipated. These higher costs will affect all our fixed services, not just broadband services,” Spark managing director Simon Moutter said in a statement.

“For the past two years, we have been anticipating a $10 reduction in broadband costs, which has been reflected in our current customer pricing. But what we didn’t expect was a $5 increase in the cost for a residential or business line – for both broadband and standalone voice services. All of this comes on top of recently implemented increases in Chorus connection charges for broadband services.”

Moutter said intense market competition meant the anticipated reduction in wholesale broadband charges (signalled by the Commerce Commission as far back as December 2012), had already flowed through into retail broadband prices.

“For instance, what you get in our basic $75 broadband plus home phone plan today would have cost you $105 three years ago. In that time, our wholesale costs have barely moved until the new charges came into effect yesterday.”

Meanwhile, Labour’s ICT spokesperson Clare Curran said consumers will bear the brunt of the Commerce Commission decision which looks set to hike up the monthly cost of broadband over the copper network.

“While Labour supports the Commerce Commission’s role as the independent umpire we note with concern that their decision to raise the wholesale copper price from their interim price creates ongoing uncertainty for telcos and looks set to make things harder for Kiwi consumers in the lead-up to Christmas.

“This is a draft final decision and submitters have just six weeks to respond to what has been described as a ‘monster set of documents’ over the summer period. This seems a short amount of time over a holiday season.

“The only people happy with this outcome seem to be the Government and Chorus. That suggests the Commerce Commission should think again,” said Curran.