Home Europe Spark warns of broadband price increases under proposed changes to telecommunications regulations

Spark warns of broadband price increases under proposed changes to telecommunications regulations

Broadband prices could increase by up to $8 a month for every household and business in the country if a bill updating the telecommunications industry is passed unchanged, Spark has warned.

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Broadband prices could increase by up to $8 a month for every household and business in the country if a bill updating the telecommunications industry is passed unchanged, Spark has warned.

The industry player made the comments in a recent submission to the Economic Development, Science and Innovation Committee considering the Telecommunications (New Regulatory Framework) Amendment Bill.

The bill will establish a new utility-style regulatory framework for wholesale fibre-based services similar to that of the electricity lines industry.

Under the changes, telecommunications infrastructure provider Chorus – which owns most of the country’s fibre network – will be subject to a revenue cap. That aims to give the company flexibility in setting the price for most of its products but ensures it does not earn excessive returns on its fibre assets.

Spark said while it supported a shift to a new regulatory model, Chorus was gaining concessions most New Zealand businesses would never enjoy – a guaranteed return on its fibre access network and annual price increases in a sector characterised by annual retail price drops.

John Wesley-Smith, Spark’s general manager of regulatory affairs, told the committee the bill did not balance Chorus’s interests with those of the rest of the industry and their customers.

“It’s important through this process that we keep reminding ourselves what this change will mean for customers,” he said.

Over the past decade New Zealand customers had the benefit of declining telecoms prices, in contrast to other utilities.

Under the utility regulatory model proposed under the bill, “the model is very likely going to result in annual regulated wholesale price increases in the foreseeable future”.

“We can project forward with reasonable certainty that regulated prices for Chorus entry-level fibre broadband are going to be about $58 a month by 2025, so we’re pretty well back at 2007 price levels,” Wesley-Smith said.

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