Spark slams Govt Telco Levy as Kiwis face extra costs

"We are disappointed that the Government has chosen to fund increased investments in rural infrastructure that is uneconomic for the market to cover."

Spark New Zealand has the passing of the Telecommunications (Development Levy) Amendment Levy Bill, criticising the Government for how it plans to fund the extension of enhanced connectivity to regional New Zealand.

As revealed by Communications Minister Amy Adams, the Bill passed over the weekend with support from all parties, other than Labour, and sees an extra $100 million of funding for regional internet connectivity across the country.

But according to the telco, the costs of Government’s Telecommunications Levy will be passed on to consumers.

“Spark New Zealand supports the expansion of broadband and mobile connectivity in rural New Zealand,” says Simon Moutter, Managing Director, Spark New Zealand.

“We’re already investing heavily in rural connectivity infrastructure and we know just how important access to modern telecommunications technology is to our customers in rural New Zealand.

“That said, we are disappointed that the Government has chosen to fund increased investments in rural infrastructure that is uneconomic for the market to cover, through a levy on the industry and its customers, rather than by using Government funds.”

The Telecommunications Development Levy is an industry levy which is collected from about 22 telecommunications companies, including Spark, that earn more than $10 million a year from operating a public telecommunications network.

It is used to fund open access infrastructure in areas where it would otherwise be unlikely to be commercially viable for them to build that infrastructure. Levy payers can then use that infrastructure to provide services to their customers.

“When the Government passed the initial legislation for the Telecommunications Development Levy in 2011, it committed in legislation that the Levy would reduce from $50 million per annum to $10 million in 2016,” Moutter adds.

“The changes announced by the Government mean this reduction will not happen, and therefore represent a new cost that we will have to pass through to our customers.”

The $50 million annual liability is allocated across 20 telecommunications providers by the New Zealand Commerce Commission, based on a proportion of their qualifying revenue.

“The bill for this from the Government to Spark New Zealand averages out at almost $1 per month for each of our consumer and business broadband and mobile customers,” Moutter adds.

“Now that the Government has confirmed the levy will continue, rather than reduce as originally legislated for, it has put upward pressure on future costs and we will have to pass that cost through to our broadband and on-account mobile customers.

“We are exploring options for adding this cost in a transparent way to our customers’ monthly statements so they understand the contribution they are making to the Government’s Telecommunications Development Levy fund.

Moutter says separating out charges such as this levy on customers’ bills is a similar approach to that taken in air travel, which include levies from border agencies and airport departure taxes when people purchase their tickets, and power companies that separate out line charges and energy industry levies on customers’ monthly bills.

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