Gloves come off as Spark demands answers over higher broadband charges

"There is a deafening silence from the Commerce Commission..."

Credit: Supplied

Spark New Zealand is challenging the Commerce Commission to front up to ordinary internet users and justify why their proposed wholesale charges for broadband and landlines are so far out of line with comparable countries.

Fresh from launching the campaign 14 days ago, the telco hopes the move will help the public have a voice in the regulatory process to set wholesale broadband and landline charges for using the Chorus copper network.

"Even though this is a complex process that would typically only involve a few dozen submissions, more than 3,000 people have now made a submission calling on the Commission to reduce wholesale broadband charges off the back of direct social media and customer engagement,” says Simon Moutter, Managing Director, Spark New Zealand.

“More people are engaging with the issue than expected when we launched the campaign and it shows that many New Zealand consumers care deeply about where the cost of their broadband is heading and the outcome of this process.

“Yet there is a deafening silence from the Commerce Commission.

“The Commission needs to front up to New Zealanders and explain why it wants to set Chorus wholesale charges at levels massively out of line with comparable countries - because these charges account for around half what every New Zealander pays each month for their broadband and landline.”

According to Moutter, the Commission’s model is asking New Zealanders to pay for the same infrastructure twice.

"It is applying a replacement cost to all of Chorus assets even though Chorus will never have to replace many of those assets as they will be overbuilt, in three-quarters of the country, by the UFB rollout - and Chorus is already getting NZ$1 billion from the Government for its share of the UFB build,” he adds.

“The proposed Chorus charges are almost 80 percent higher per line than the median charge of comparable countries – that’s up to NZ$180 more per year.

“We think that’s not on and that Chorus charges should actually be reduced. The Commission should publically explain to consumers why it is in New Zealand’s interest to set wholesale internet charges so much higher than the rest of the world.”

Moutter says New Zealanders have been getting a lot more value in their internet plans over recent years and a transformational change is underway as they embrace digital services in their homes and businesses.

“This is having massive positive flow-on benefits to our economy and society as more people take advantage of the digital communications revolution,” he adds.

“It simply doesn’t make sense to impede the progress of New Zealand businesses or reduce the opportunities for New Zealand families by saddling them with broadband charges out of step with the counties we compete with.”

Recent figures from Spark New Zealand showed average monthly data use per household for Spark broadband customers has grown 29 percent in just three months, from 42.5GB in February 2015 to 55GB in April 2015.

The average New Zealand house is now using approximately as much data in a year as the whole of New Zealand used in a month back in the late 1990’s.

But because Chorus has a monopoly on the copper network, the Commerce Commission sets what it can charge all service providers, including Spark, to connect their customers to the internet.

Chorus monopoly charges make up around half the price customers pay service providers to connect their internet or landline, so any increase has a huge impact on the final price with the Commission due to release an interim decision in June and confirm the charges in December.

"We accept this is a complex process, but it boils down to whether the Commerce Commission is prepared to act in the best interests of consumers and ensure Chorus monopoly charges are not way out of line with the rest of the world,” Moutter adds.

“Because the proposed charges will hit everyone, I invite all New Zealanders, whether you’re a Spark customer or with another provider, to visit to find out more and send a submission to the Commerce Commission telling them to reduce internet charges.”

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Tags broadbandinternetUFBCommerce CommissionSimon MoutterSpark New Zealand

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