Mixed news for consumers in Commerce Commission decision

Thursday, 2 July 2015, 9:43 am
Press Release: Spark

Mixed news for consumers in Commerce Commission decision on broadband line charges says Spark New Zealand

Spark New Zealand said today it was encouraged the Commerce Commission has taken on board consumer feedback, but disappointed the Commission is still proposing a significant increase in wholesale line charges to access the Chorus copper network.

In its latest draft decision, the Commission proposed today that broadband line charges be increased from December this year by $3.97 per month (incl. GST) per line above current charges, with further increases totalling $1.37 in annual increments over the following four years. This compares with its earlier proposal for a flat-rate increase of $4.54 per month.

“While the Commission has slightly reduced first-year charges from its earlier draft position, this decision (if finalised) would still mean wholesale line charges in New Zealand are around 70% higher than comparable countries,” commented Spark New Zealand managing director Simon Moutter.

“More than 52,000 New Zealand consumers sent a strong message to the Commission about the cost of broadband as part of our ‘Be Counted’ campaign. We’re encouraged that the Commission has noted the campaign in its decision and has said that it welcomes greater consumer participation in its regulatory process.”

Mr Moutter said Spark was pleased the Commerce Commission is now looking to take backdating of the higher broadband line charges off the table. In its earlier draft decision, the Commission had foreshadowed backdating to December 2014 which has created major industry uncertainty. This uncertainty caused Spark to reluctantly increase prices on most of its broadband and landline plans from February 2015 to partially offset the impact of backdated charges.

If the Commission confirms backdating is ruled out in its final decision, and that decision is not subject to appeal, Spark will honour its commitment to pass the value of these related retail price increases back to customers in a fair and transparent way. However, if the Commission reverses its decision on backdating, that will create more upward pressure on retail prices as there has only been partial recovery of increased line charges to date.

“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,” said Mr Moutter. “We will continue to advocate on behalf of our customers as the Commerce Commission moves towards a final decision at the end of the year.”

He said Spark wanted to be more upfront with its customers about what makes up the retail price of a broadband or landline plan. It was looking to change the way it presents pricing on customer bills to give a clearer breakdown of regulated lines charges and government taxes and levies.

ENDS

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