Spark laments ‘worst possible Christmas present’

15 Dec 2015

Spark (formerly Telecom New Zealand) has said a decision by the country’s telecoms regulator to increase prices for wholesale access to copper and broadband networks is ‘the worst possible Christmas present for New Zealand consumers and businesses’. The Commerce Commission has released its final ruling on the prices that service providers such as Spark should pay to national infrastructure owner Chorus for unbundled local loop (ULL) and unbundled bitstream access (UBA).

The watchdog has set a ULL price of NZD29.75 (USD20.20) per connection per month effective from 15 December, which is higher than both its draft decision of 2 July – which had the price at NZD26.74 – and the previous fee, in effect since 1 December 2014, of NZD23.52. The UBA component will now be charged at NZD11.44 a month, up from the draft price of NZD11.15 and the previous charge of NZD10.92. In total, the overall fee per line will rise to NZD41.19 per month compared to the draft level of NZD37.89 and the December 2014 fee of NZD34.44. The fees will be subject to annual hikes, rising to a total of NZD41.44 in year two, NZD41.71 in year three, NZD42.02 in year four and NZD42.35 in year five.

The increases have been welcomed by network owner Chorus, which has been calling for the Commerce Commission to increase the prices to better reflect the real-world costs of deploying and maintaining infrastructure. Chorus CEO Mark Ratcliffe commented: ‘We have consistently said that the previous draft prices significantly underestimated the true value of Chorus’ network, so it is pleasing that the Commission has taken on board the industry’s repeated requests.’ The company added, however, that the decision not to backdate the price hikes was ‘disappointing’.

Spark, meanwhile, estimates that the decision will increase its copper input costs by NZD22 million in 2016 and says it will be forced to pass the price rises on to its fixed line and broadband customers in the form of higher tariffs. Spark’s managing director, Simon Moutter, said: ‘The massive swings in successive Commerce Commission decisions within a matter of months makes it extremely hard for any business to invest, plan and price its services effectively. We have now had two years of market disarray, with significant fluctuations at every stage of the process. The losers out of this are New Zealand consumers and businesses.’

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