Spark flares up at wholesale charging proposals

2 Jul 2015

Spark (formerly Telecom New Zealand) says it is ‘disappointed’ that the industry regulator, the Commerce Commission, is proposing increases to wholesale line charges for accessing the network of national copper infrastructure owner Chorus. Spark has been campaigning to have the charges reduced so that it can pass this on to consumers in the form of lower broadband tariffs.

The regulator’s initial pricing principle (IPP) published last year said that the Unbundled Local Loop (ULL) component of the charge should be set at NZD23.52 (USD15.93) and the Unbundled Bitstream Access (UBA) component stand at NZD10.92, with effect from 1 December 2014, giving a total cost of NZD34.44. On 2 December, however, the Commission released a draft final pricing principle (FPP) which proposed that the ULL charge should rise to NZD28.22 while the UBA fee would fall slightly to NZD10.17, with the revised charges to be backdated to 1 December once a final decision had been reached.

In its latest draft FPP the Commerce Commission is proposing that the ULL charges increase over time on a five-year sliding scale, starting at NZD26.74 in year one and rising to NZD28.56 in year five. The UBA cost would be decreased, meanwhile, from NZD11.15 in year one to NZD10.52 in year five. The pricing would come into effect on 1 December 2015, with no backdating to 2014. While Spark says it recognises that the initial total charge of NZD37.89 is an improvement on the NZD38.39 proposed on 2 December, it says wholesale line charges in New Zealand will still be around 70% higher than those in comparable countries.

Spark’s managing director, Simon Moutter, commented: ‘We think New Zealanders deserve good value broadband. Around half the monthly cost for broadband goes to line charges, so the Commerce Commission’s decision has a big impact on what consumers and businesses pay for their broadband. We will continue to advocate on behalf of our customers as the Commerce Commission moves towards a final verdict at the end f the year.’ Spark recently began a petition calling for the wholesale charges to be lowered and says it has collected 52,000 signatures to date.

New Zealand, Chorus (New Zealand), Commerce Commission of New Zealand, Spark