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ComCom favours deregulating Spark resale copper voice services

Wednesday 17th April 2019

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The Commerce Commission is leaning towards deregulating Spark New Zealand's resale copper voice services, as dwindling customer numbers indicate enough alternatives are available. 

The regulator backed away from deregulating the services in 2016, but is now confident there's enough competition to warrant the move. Retail services providers buy Spark's wholesale voice services to sell bundled with broadband, meaning they don't have to invest in their own infrastructure. 

Since the 2016 review, the number of Spark's resold lines have more than halved to 150,000 as more customers shift to alternatives such as internet protocol services over Chorus's copper network, fixed wireless options including Spark's own hybrid service, and voice over internet protocol services on a broadband connection. 

"We continue to consider that direct costs of regulation are small. However, we consider that there are other indirect costs associated with continuing to apply regulation when it is no longer deemed necessary," the commissioners said in a draft report. 

Telecommunications Commissioner Stephen Gale said the regulation is no longer needed to promote competition. 

"As fibre and other next generation services have become available across New Zealand, consumers are making the switch away from legacy copper-based voice services. Other providers offer wholesale voice services that compete with these services meaning regulation is no longer necessary,” Gale said in a statement. 

Spark's wholesale and other revenue of $118 million in the six months through December was down 7.8 percent from a year earlier, of which just $2 million came from broadband and $18 million from mobile. 

Spark's voice revenue has been on the decline for several years as a growing number of customers have ditched traditional phone lines and relied more heavily on mobile and digital connections. The company's $250 million of voice revenue - including retail - accounted for just 14 percent of sales in the six months through December. 

The telco's plain old telephone service and integrated subscriber digital network voice connections dropped 28 percent in the December half to 356,000, whereas its voice over internet protocol numbers rose 21 percent 57,000 and its voice over wireless connections were up 29 percent at 18,000. 

Submissions on the commission's draft report close on May 17. A final recommendation to the minister is expected in July. 


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