Final decision on telco providers' levy contributions

12 December 2019
Release no. 61

Final decision on telco providers’ contributions to $50 million development levy

The Commerce Commission has released its final decision on how much 16 telecommunications providers will each pay towards the Government’s $50 million Telecommunications Development Levy (TDL) for 2018/19. It has also issued a consultation document on changes to the levy which may see some broadcasting services companies included from next year.

The Government uses the annual levy to pay for telecommunications infrastructure and services which are not commercially viable, including the relay service for the deaf and hearing-impaired, broadband for rural areas, and improvements to the 111 emergency service.

The levy, about 1% of telecommunications services revenue, is paid by providers earning more than $10 million per year delivering telecommunications services, including internet, mobile, and data services. The Commission’s role is to allocate the levy between these providers.

Spark, Vodafone, Chorus and 2degrees will collectively pay more than 90% of the levy. However, growing uptake of fibre services means the contributions to the TDL by Enable, Northpower, and Ultrafast Fibre have increased significantly.

There have been two minor changes since the draft determination, with Vital and MyRepublic’s contributions decreasing. The remaining 14 providers have seen their allocations marginally increase as a result.

The Commission has also opened an investigation into whether MyRepublic failed to meet its obligation to provide audited financial information used to calculate the levy before the statutory deadline. The Commission formally warned MyRepublic for similar conduct earlier this year.

Alongside the final determination, the Commission has also released a consultation paper on how it proposes to treat broadcasting services revenue in the TDL from next year. This is the result of legislative changes to the Telecommunications Act which removed the exclusion of broadcasting in the definition of telecommunications.

The Commission is seeking industry feedback on how it plans to interpret the effect of the changes.

A copy of the consultation paper can be found here.

The Commission invites submissions on the consultation paper via email to regulation.branch@comcom.govt.nz by 5pm, 12 February 2020.

The final TDL determination can be found here.

An infographic showing how much each provider will contribute to the TDL is available here.

Background
The TDL was established in 2011 and is currently set by the Government at $50 million a year but is set to decrease to $10 million in 2020.

Companies (or groups of companies) earning more than $10 million of telecommunications services revenue per year are liable to pay the TDL. Previously broadcasting services revenue was treated as non-telecommunications revenue meaning it was not in scope of the TDL.

The Telecommunications (New Regulatory Framework) Amendment Act 2018 altered the definition of ‘telecommunication’. This means that some forms of broadcasting services revenue will now be treated as telecommunications revenue and will be relevant to determining whether a company meets the $10 million threshold.

Parties liable to pay the TDL only pay the levy based on their qualified revenue. The Amendment Act inserted an exclusion from qualified revenue for any revenue received in relation to free-to-air broadcasting services.

More information on the TDL is available on our website.

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