Internet, international phone charges may rise

The cost of carrying internet traffic to and from New Zealand and the price of international phone calls could rise sharply under a proposal by the United States' Federal Communications Commission to impose a 15.7 per cent levy on the revenues of subsea cables connecting to the US.

The levy, known as the Universal Service Fund, currently applies mainly to domestic US telecommunications companies providing services between states in the US.

Most internet traffic and phone calls to and from New Zealand are carried over the Southern Cross Cable, which connects New Zealand and Australia to the US.

US publication Telegeography reported Southern Cross Cable Network, which is half-owned by Telecom, was one of several cable operators that had objected to the FCC's proposal.

Telecommunications Users Association chief executive Paul Brislen said extending the levy was "only a proposal" at this stage but could also have a "chilling effect" on Pacific Fibre's plans to build a new trans-Pacific communications cable.

New Zealand telecommunications users would ultimately foot the cost of the levy, which would go towards the betterment of telecommunications infrastructure within the US, he said.

The FCC indicated extending the levy would raise more than US$500m (NZ$626m) a year, not just from New Zealand cable operators.

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