Regulation of Spark’s wholesale voice services under review

Commission recommends revisiting the regulation of Spark’s wholesale voice services in two years

The Commerce Commission has completed its investigation of whether to recommend to the Minister for Communications that Spark’s wholesale voice services provided on copper lines should be deregulated.

Retail service providers (RSPs) buy Spark’s wholesale voice services to sell bundled with broadband. In doing so, RSPs avoid investing in their own voice facilities or switching customers to an internet-based voice service.

“The availability of the wholesale voice services in the Act has helped new RSPs enter the market and has intensified competition”, said Telecommunications Commissioner Dr Stephen Gale.

RSPs currently buy Spark’s wholesale voice services by commercial agreement but the Telecommunications Act provides a regulatory backstop. We could compel Spark to supply these services at a margin less than its own retail price if commercial arrangements fail in a way that threatened competition.

Dr Gale said the Commission’s investigation found that Spark is facing increasingly effective competition to its wholesale voice services. However, the ability of RSPs to switch quickly to alternatives is still constrained.

“There are a range of alternatives in the market that allow RSPs to supply voice-only services as well as bundles of voice and broadband. But the constraint on RSPs switching to alternatives quickly and easily may allow Spark to disrupt competition if the regulatory backstop were removed from the Act now.” Dr Gale said.

“We believe this constraint on switching will diminish in the near future, so we are recommending that the Minister defers the decision so we can revisit our recommendation in two years’ time.”

A copy of the Commission’s final report can be found on our website.

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