Vodafone to raise prices after ComCom decision

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Vodafone is following rival company Spark and raising its prices for some home, landline and broadband customers following the Commerce Commission's decision to increase wholesale copper line charges.

On Tuesday, the Commission announced that the wholesale price for access to Chorus' copper network would be raised to $41.69 per month, $3 higher than expected, after it conducted a further pricing review.

Vodafone's consumer director Matt Williams said copper pricing in New Zealand was already high by international standards and the increase was not in the best interests of consumers.

"It is very unfortunate that New Zealanders will continue to be charged much more for copper access than friends and family around the world," Williams said.

Telco Spark yesterday responded by saying it would have to lift prices for some broadband and landline plans from February, with Vodafone following suit today and saying it would be lifting prices from March.

ADSL/VDSL Vodafone customers with broadband, or home landline and broadband connections would face a $5 per month increase.

Spark home landline customers in Auckland, Wellington and Christchurch would pay $3.50 per month more, while ADSL/VDSL broadband customers are also facing a $5 monthly increase.

Spark said the new Chorus charges, which took effect yesterday, were almost $8 per month higher for broadband services and $7 higher for landline voice services.
Spark's Jason Paris said he was disappointed about the price increase.

"We have worked hard over the past few years to keep prices as low as possible, and we want to keep them that way," Paris said.

"However, this regulatory decision means a significant and unexpected increase in our underlying costs, so unfortunately we have been forced to reflect these costs in our customer pricing."

He said the decision not to backdate when the new Chorus line charges came into effect was the only good news in the regulator's pricing decision.

"In light of the Commerce Commission's earlier threat of backdating, we put up our prices in February this year," Paris said.

"At the time, we said that if there was no backdating, we would do the right thing and return savings where we could to customers who were affected by the price increases in February and remained on their impacted plan."

Paris said eligible home landline customers in Auckland, Wellington and Christchurch would receive a credit on their monthly bills, while eligible 40GB and 80GB ADSL/VDSL broadband customers nationwide would have the choice of a few options, one of which would be an account credit.

Spark said it would proceed with the credits from March, provided there were no appeal proceedings.

Home landline customers outside the three main centres will not receive any credit, but their prices will not be increased in February, the company said.

Spark added that ADSL/VDSL customers on Unlimited plans would also not be eligible for a savings credit, as their plan prices did not increase earlier in the year and were instead reduced by $10 a month.

Ultra Fibre broadband plans will not face price increases, as their services are not dependent on the copper network.

The regulator's decision sent Chorus' share price soaring.

It will boost the firm's annualised operating earnings by $120 million.