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Consumers gain $4/month net decrease from wholesale broadband price drop

21 Jun 2017

The Commerce Commission has today released a study showing that 90% of the recent reductions in Chorus’ regulated wholesale broadband prices have flowed through to consumers. In December 2015, the Commission announced its final decisions on the wholesale prices Chorus could charge internet providers for its broadband services over local lines.

Those decisions produced a net decrease of just under $4 per month per customer compared to wholesale prices a year earlier. The study looked at a sample of approximately 80,000 residential consumer bills from Spark, Vodafone and Vocus between March 2012 and June 2016.   Telecommunications Commissioner Dr Stephen Gale says the Commission wanted to assess the effect of its regulatory decisions on average retail prices. “We’re pleased that nearly 90% of the wholesale price drop has been passed through to residential consumers.

“In this case, our regulation reduced wholesale prices and it’s good to see consumers benefiting.

“At the same time as average prices have been falling, it’s also good to see the value of standard bundles continuing to increase with consumers getting more data for their dollar,” Gale says. The Commission regulates the wholesale inputs that are required to supply broadband services and retail fixed-line voice services.

Although it only regulates wholesale telecommunications services, considering how its decisions have affected retail prices allows it to understand the impact on residential consumers. As part of its monitoring role, it wants to better understand competition at the retail level by considering the effect of changes in wholesale broadband prices on retail prices for fixed-line services.

The December 2015 decision stated that the maximum monthly rental prices that Chorus can charge for its unbundled copper local loop (UCLL) and unbundled bitstream access (UBA) service for the first year are $29.75 and $11.44 per month respectively – a total of $41.19.

This was an increase from the July draft decision, which proposed a UCLL price of $26.74 and UBA price of $11.15, with the total being $37.89 for the first year.

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