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Wholesale charges to blame for high internet costs, says Spark

08 Jun 15

High charges for wholesale broadband are pushing up the retail price of the internet for Kiwi consumers. 

That’s Spark’s take on a Commerce Commission report released earlier today. 

“Retail prices have been reducing during the past few years due to strong competition in the marketplace, but wholesale charges are already high and the Commerce Commission is looking to push them up even higher,” claims Andrew Pirie, Spark New Zealand general manager corporate relations.

The Commerce Commission’s annual report analyses the state of the telecommunications industry in New Zealand. Spark says this latest report highlights that while there is healthy competition and price reductions at the retail level, with ‘internationally competitive’ prices for entry-level and ‘naked’ plans, prices for a number of New Zealand’s broadband packages are still higher than comparable countries.

“This is putting upward pressure on prices and means New Zealand’s internet isn’t as affordable as it could be,” Pirie says. “Around half of the average customer’s bill goes to paying the wholesale charges, meaning they have a big impact on what people pay.”

Last month Spark New Zealand launched the Be Counted campaign to help explain to New Zealanders what makes up the cost of their broadband, and to give them a way of sending a submission into the Commission asking it to reduce wholesale charges for broadband. 

To date, more than 50,000 people have visited the website and sent in a submission asking the Commission to reduce charges.

“This report reinforces that the Commerce Commission had the right idea when it initially proposed to reduce wholesale broadband charges,” says Pirie. “New Zealanders are waking up to the fact that while we have a healthy competitive retail market for telecommunications, we face unfair wholesale charges that push up the price of connectivity.”

“Our research shows that New Zealand’s wholesale broadband charges are up to 80% higher than comparable countries, which equates to around $180 more per year for every internet and landline customer,” he explains.

“If New Zealand’s wholesale charges were more in line with the rest of the world, our performance in studies such as this would look a lot better.” 

The Commerce Commission will shortly make a decision that will have a big impact on how people pay to use the internet or landline.  It is in the final stages of a process that to set the charges that internet service providers (such as Spark, Vodafone and Slingshot) are required to pay the monopoly access provider (Chorus) for internet and landline connections over the copper network.

“We hope the Commission listens to the tens of thousands of ordinary internet users who have joined us in calling for wholesale charges to be reduced,” adds Pirie.

Click here to view the full New Zealand Commerce Commission Annual Telecommunications Monitoring Report.

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