Commerce Commission asked to look into wholesale internet pricing

Spark has launched a new website to educate the public on why prices for wholesale internet should not be increased.

The internet is now an essential part of doing business in New Zealand. However, some internet companies feel the price New Zealanders pay for it cannot be justified when compared to other OECD countries.

This comes as a response to the Commerce Commission’s investigation into what a fair price for wholesale internet would be for telecommunications companies and consumers.

Spark has blamed Chorus, which has a monopoly on the copper network, for keeping prices too high, and has urged the Commerce Commission to act to reduce it.

While the value of broadband plans has been on the up and up in recent years, increasing the wholesale price has the potential to erase those gains.

Spark New Zealand Managing Director Simon Moutter has said,”what you get in a basic broadband plan today for $79 (phone and 40GB data) would have cost $105 in December 2012, $129 five years ago, over $700 per month in 2005, and over $13,500 per month in 1999. Internet users can also get a $99 Unlimited data plan, which was not even available when the Commission started the price setting process”.

Many small companies in New Zealand are utilising the internet to reach new customers at home and abroad. With the high quality retail management support software, any business regardless of size can use the web to expand their sales and revenues.

By pushing wholesale prices back up, prices for using the internet would also have to increase. This is an additional cost to both households and businesses that rely on the internet in their daily lives.

Spark has said because of a rise in the price of wholesale internet last year, it had to raise the price of all its plans by $4.

“Around half of what everyone pays is the wholesale Chorus charge – so any increase has a big impact on the final price for Spark customers, and for customers of all internet service providers,” said Mr Moutter.