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Spark hikes broadband charges

New Zealand's biggest telecommunications retailer has responded to regulatory price signals and uncertainty about backdating with higher prices.
Written by Rob O'Neill, Contributor

Telecommunications retailer Spark will hike its charges for phone and broadband plans in response to the Commerce Commission's revised draft wholesale pricing for copper network access, announced last week.

The new charges will apply from February 1, 2015.

Spark said home phone-only plans and 40GB and 80GB broadband plans, both ADSL and VDSL, will go up by between NZ$2.50 and NZ$4.25 a month. Similar increases will be made to charges for business copper broadband plans.

Last week, the Commerce Commission released a draft decision signalling a NZ$5.40 increase in the wholesale charges for home phone lines and a NZ$4.54 increase in broadband line charges that took effect on December 1.

However, uncertainty remains about whether the Commerce Commission's revised charges will be backdated. Network operator Chorus is arguing that they should be.

Spark said the impact of the increases will be felt mainly on low-end plans. At the high end, for unlimited broadband and home phone packages, Spark said it would cut prices.

"Over the past two years, we have been competing hard in the broadband market on the basis that there would be a NZ$10 reduction in the monthly charge we pay Chorus for providing copper broadband access," Spark home, mobile, and business chief executive Chris Quin said.

However, that expected reduction has been halved.

"Now it's indicated that wholesale broadband access charges will go down by almost NZ$5, rather than NZ$10, and home phone access charges will go up by more than NZ$5. We understand this is how the process works, but we do have to react accordingly."

Quin said the increases announced would only partially recover increased wholesale charges if the regulator decides to backdate its decision.

"Given this negative uncertainty, Spark has no choice but to change its prices now," Quin said.

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