NZ is the only country where Internet access is getting more expensive

Spark, Vodafone and Callplus together represent 94 percent of the residential internet market and all have put up their prices for home internet packages.

Internet service providers blame the rises on the Commerce Commission’s recent draft decision which reduced the price companies pay for use of the copper wire network.

The charges relate to what Chorus (the wholesaler) charges internet service providers and telcos like Spark, Vodafone, Orcon, Slingshot and Flip, for accessing their copper infrastructure which was deployed years ago by the Post Office. Those wires run down almost every street in the country and are the phone lines we have been using for decades.

Because it is a monopoly, the price that the wholesaler can charge is regulated by the Commerce Commission.

In 2011, when Telecom was split into a retail arm (Telecom) and a wholesale arm (Chorus), the Commission had to work out what Chorus’s wholesale services were worth, and what price they would charge internet service providers and telcos, including Telecom (now Spark) to use those services.

The price was originally set at about $45 per customer per month.

After changes to the Telecommunications Act in 2011 – which required a new model for setting the price to be adopted – the Commission came up with a figure using international benchmarks – comparing New Zealand with other similar countries that sell similar services.

As a result of that it released what it called its interim price in 2012 which it calculated at $33.44 per customer per month.

But while Chorus argued that price was too low, retailers felt it was too high. So in 2013 the Commission embarked on a final pricing principle, recalculating the figure, based on what it would cost Chorus to build a new network in New Zealand similar to what is already there.

It then calculated what Chorus is allowed to charge based on that network build costing.

The Commission had intended to reduce the price from $45 a month to $33.44 but decided to settle on a figure of $38.39.

The telcos have already worked the $34 price into their assumptions and have now adjusted their prices to reflect that final higher price.

Spark, Voda et all worked their pricing on the expectation of a lower cost, but now have to shift about $5 per per month per connection onto the consumer to compensate.

Chorus and the Commerce Commission have essentially screwed us over.  There should be an access charge that reflects the ongoing cost and maintenance with a suitable margin.  To base it on the present day value of completely replacing the copper network is just absurd.

It is rather interesting that the Commerce Commission has acted in a way that rewards one monopoly at the expense of it’s customers, and in the end, all of us who finally are paying for it.

Remember though that this is the same Commerce Commission who despite more than 90 complaints about  Countdown and their mafioso tactics with suppliers decided to emulate Helen Clark and declare that there was “nothing to see here, time to move on”, also ignoring the slew of prosecutions underway in Australia for the same tactics and behaviours.

Basically the ComCom has tits for hands , and if brains were dynamite they wouldn’t have enough to blow their nose.

 

– RNZ

 


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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story.  And when he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

They say that news is something that someone, somewhere, wants kept quiet.   Cam Slater doesn’t do quiet, and as a result he is a polarising, controversial but highly effective journalist that takes no prisoners.

He is fearless in his pursuit of a story.

Love him or loathe him.  But you can’t ignore him.

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