Wholesale broadband price cuts passed on to consumers

The Commerce Commission has released a study that shows 90 percent of the recent reductions in Chorus’ regulated wholesale broadband prices have flowed through to consumers.

In December 2015 the Commission announced its final decisions on the wholesale prices Chorus could charge internet providers for its broadband services over local lines, reducing the price by almost $4 per month per customer.

The study is based on analysis of approximately 80,000 residential consumer bills from Spark, Vodafone and Vocus issued between March 2012 and June 2016. Its release was accompanied by and expert report on on the analysis prepared by Schiff Consulting.

In its report the commission said: “Schiff’s analysis suggested that Vocus had a greater pass-through of the regulated wholesale copper price changes than Spark or Vodafone.”

However Schiff also noted there was a relatively high degree of variability in the amounts charged by retailers to customers in the sample of bills it examined, adding: “The variability is higher in the data for Spark and Vodafone compared to Vocus. This variability may make it difficult to accurately estimate past through effects, particularly for individual retailers.”

Telecommunications Commissioner Dr Stephen Gale said that, in parallel with average prices falling, the value of standard bundles had increased with the amount of included data in broadband packages increasing.

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Tags broadbandVodafoneConsumersvariable costVocuswholesaleChorusCommerce Commissionpricecopper pricesbroadband pricingcapsparkprice ceiling

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