Telcos pour cold water on price cut call

Telecommunications Users Association of New Zealand chief executive Craig Young.

Telecommunications Users Association of New Zealand chief executive Craig Young.

The country's two largest telcos are downplaying suggestions broadband prices should fall when wholesale price cuts come into effect in December.

The new head of the Telecommunications Users Association, Craig Young, said one of his first priorities would be to encourage internet providers to pass on to customers a $12.54 cut to the monthly rental they pay Chorus for a copper broadband connection and phone line.

But Spark spokesman Andrew Pirie said it was "far more complicated than that", suggesting consumers had to some extent already had the price cut.

"The lower input cost has been keenly anticipated for some time, since it was first signalled two years ago," he said. "A $75 broadband plan today would have cost you $105 then. The other issue is we don't yet have a sense of where final wholesale pricing will be going."

The wholesale price cut, to $34.44 a month, will take effect from December 1, the same day the Commerce Commission is due to publish a new revised draft price, based on a review called for by Chorus, that could be revised again before it takes effect some time next year.

Young acknowledged internet providers might have to pay back the savings they made from December, if Chorus ultimately managed to persuade the commission or the courts that it should have been entitled to a higher price.

However, he said Tuanz would be encouraging them to pass on the savings anyway. If they didn't, it would want them to be "transparent" about what they were doing with the savings, he said.

"Each internet provider, if they don't pass it on, is going to have to be clear about why they are not passing it on and what they are doing with the savings."

Vodafone spokesman Craig Jones was non-committal on whether it might pass on the cut, echoing Spark's observations.

"New Zealand's broadband market is highly competitive and prices have been steadily declining over the past few years despite Chorus' prices remaining the same," he said.

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"There's still uncertainty around the final copper price so it's too early to say what cost savings can be achieved for our retail products."

Young, who was formerly Chorus' industry relations boss, took up the Tuanz role this month after a brief hiatus that followed the departure of former head Paul Brislen in May. He is the lobby group's sole employee.

He said Tuanz might have a lower public profile under his stewardship but promised to focus on its advocacy work while also aiming to put Tuanz on a firmer financial footing and hold more events.

Tuanz remained the only organisation set up to represent the interests of end users - both businesses and consumers - in the telecommunications industry, he said, but would be looking to work with other organisations where they shared the same principles and vision.

 - Stuff


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