Spark NZ to ComCom… Rethink Chorus wholesale charges

International experts calculate proposed charges could be at least $12 a month higher than they should be…

“We think we’ve shown enough to put the onus on the Commission to change its model to exclude these costs - or if not, to explain why it would be in New Zealand’s best interests to hold broadband prices up by setting wholesale charges 80% higher than in other countries.”

Wesley-Smith said two international expert firms commissioned by Spark New Zealand had independently reviewed the Commission’s cost model and concluded it overstated the costs involved in Chorus providing wholesale voice and broadband services by a considerable margin.

By making some conservative adjustments to the Commission’s model, Wesley-Smith said one expert firm came up with a charge for landline access of $16.64 a month – compared with $28.22 proposed by the Commission.

The other expert firm said this charge could be reduced even further if the model took more account of newer technologies such Fixed Wireless Access (FWA).

“With these adjustments the wholesale charges in New Zealand would be much more in line with those applied overseas – and this would translate into lower retail broadband prices than we have today,” Wesley-Smith added.

“We are doing everything we can, in what is a fiercely competitive market with about 80 providers, to give New Zealanders more value and keep broadband prices low.

“Yet the Commission’s draft decision will make broadband less affordable for New Zealanders.

“It also doesn’t make sense that the charges for last-century copper broadband are increasing at a time when ultra fast broadband (UFB) over fibre is being rolled out to three quarters of New Zealanders.

“The Commerce Commission needs to make it clear why any increase in wholesale charges for copper access would be justified.”

Wesley-Smith said Spark New Zealand was also concerned that the Commission was leaning towards backdating the new Chorus charges to 1 December 2014, even though it would not finalise charges until at least the second half of 2015.

Because of this uncertainty, Wesley-Smith said Spark “reluctantly increased” its prices for home phone and broadband packages by between $2.50 and $4 a month from 1 February 2015, in a move that only partially offset the expected increase in Chorus wholesale charges.

Wesley-Smith said Spark New Zealand had given a written undertaking that if the Commission decided 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.”

A copy of Spark New Zealand’s submission can be downloaded by clicking here

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags ChorusCommerce Commissionspark

More about Commerce Commission

Show Comments
[]