We're heading in the wrong direction

We're heading in the wrong direction

This is a blog post that has appeared on InternetNZ's website at: https://internetnz.nz/blog/were-heading-wrong-direction.

By Andrew Cushen

I'm disappointed that most of New Zealand's telcos have decided that we need to pay more for the Internet in 2015. What I'm referring to is this - http://www.nzherald.co.nz/technology/news/article.cfm?c_id=5&objectid=11382722 - news that Vodafone and Callplus are following Spark's lead from late last year and pushing their prices up for home internet packages. Between those three companies, these pricing changes will impact approximately 94% of New Zealand internet users.

We're being sold the story that this is all due to the Commerce Commission's decisions in early December on Copper pricing. The funny thing is that the immediate impact of these pricing changes was to lower the prices that these telcos pay - not increase them. Yes, the process isn't over yet, and yes the Commission has also signalled that prices may need to go up again later on this year - but those decisions haven't been made yet either.

So what then is the justification for these price increases then? Regulatory uncertainty is the catchcry we hear next; that the generous telcos had anticipated lower prices from the Commerce Commission, and so they baked those lower prices into our plans already. Now that their dreams of a cheaper copper baseline haven't been realised, they have to push prices up. We aren't so sure on this line either - it seems to us that if this pricing has already been baked in, then that was awfully silly of these telcos. Business models that do presumptive price cuts aren't famously common. I'm also struggling to see exactly when this supposed massive price decrease happened.

The alternative explanation is that Vodafone and Callplus have decided to be a bit sneaky, and to use the tail end of everyone's Christmas break to push through a price increase and blame it on someone else - namely the Commerce Commission. What we do know though is that New Zealand telcos have decided that they don't make enough money out of New Zealanders - they've been pretty blatant in declaring it over the last few months. So when all three big telcos, that combined control 94% of the market, move to increase prices for New Zealanders under the most spurious of rationale, then something fishy is happening.

We've put out a press-release on this - you can see it here: https://internetnz.nz/news/not-sure-if-uncertainty-causes-price-rise-or-just-greed

In it, we make clear that we don't understand the justification for these price increases versus the reasons given. We don't know exactly what is running through the minds of New Zealand telcos when they've decided that everyone needs to pay more today - but what we do know is that when prices go up like this, we are heading in the wrong direction for the Internet in New Zealand. And that seems to me to be a big shame. Let's be clear here though - at InternetNZ, we stand for promoting the benefits and uses of the Internet and protecting its potential. For those benefits and potential to be realised, we need robust and competitive infrastructure and service provision from New Zealand ISPs. We don't then object to ISPs making profit or recovering reasonable cost increases. We do however draw a line when those behaviours stray into straight self-interested profiteering, and that's what we are concerned is happening here.

ENDS

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