Spark's campaign should help Commerce Commission come to the right decision, InternetNZ boss says

The independent, non-profit InternetNZ is backing a new website created by Spark to push its barrow over wholesale copper line pricing.

The site, www.becounted.org.nz (not yet live to the public as NBR types) reiterates Spark's argument that wholesale copper broadband charges are nearly 60% higher in New Zealand than comparable countries, and that the Commerce Commission should not be increasing them (or, more accurately, not cutting pricing to the degree promised in a draft decision).

InternetNZ chief executive Jordan Carter says there are some important questions being raised by Spark, "and the Commerce Commission needs to set out why it wants to set regulated prices in New Zealand that are so much higher than overseas.

“New Zealanders have been enjoying lower prices for better plans for a number of years. This regulatory process risks bucking that trend and pushing prices back up.

“If the Commerce Commission wants to take that approach, it needs to make a clear and compelling case for why New Zealanders should pay more. At every stage of its regulatory process so far, it has been pushing prices up – in a way that isn't supported by the evidence shared in submissions.

“The internet is such an important piece of New Zealand’s infrastructure that it’s vital Kiwis are not paying too much for it. Any price increase that Chorus is able to take, it will take, and any increase it charges to retailers will no doubt be passed on to Kiwis.

“We’ve said from the beginning that this process needs to be taken slowly so that we get it absolutely right – this despite calls from the Shareholders’ Association and others with a vested interest to rush it,” Mr Carter says.

Chorus argues the regulatory process dictates that the Final Pricing Principles process now under way should be based on the cost of replacing its network, not overseas benchmarks. Chorus also argues that, regardless, New Zealand's comparatively thin and scattered population makes it unique.

A draft Commerce Commission proposal, released in December, wants Chorus' wholesale pricing on a typical home line setup to be cut from $44.98 to $38.39*. Retail ISPs were up in arms over the $6.59 cut. They had been expecting the regulator to confirm the larger $10.54 cut to $34.44 flagged in its earlier Initial Pricing Principals (IPP) process – and many, including market leader Spark, had already baked the full $10 cut into their retail pricing and market guidance.

The draft price represents an ebitda hit of around $80 million a year for Chorus. The company says it will look at resuming dividends if the Commission's final pricing determination goes in its favour.

There are several rounds of drafts and cross-submissions go before the final decision later this year.

* The total cost of different wholesale services needed for a typical home line with voice and broadband.