Spark unhappy with Chorus cap

Consumers will have to pay more for ultra-fast broadband (UFB) and the price ‘‘will keep increasing’’, Spark managing director Simon Moutter has told shareholders.

Communications Minister Kris Faafoi said last month that a commercial deal the Government had struck with network company Chorus over wholesale UFB pricing would ‘‘protect New Zealanders from future price shocks’’.

The deal will cap the price that internet service providers pay Chorus for 100-megabit UFB connections at $45 a month until July, with that cap then rising by $1 for the subsequent year.

But Moutter, speaking at the telecommunications company’s annual meeting in Auckland, indicated Spark was not impressed with the outcome.

‘‘The wholesale price we pay for fibre services is way too high and the retail prices we charge don’t allow for anything like an acceptable margin,’’ he said.

‘‘Let me tell you now – the retail price for fibre services will start increasing and it is going to keep increasing because the wholesale prices we pay are going to increase every year from now on. It’s a massive missed opportunity for our industry and for our country that we can’t repeat with 5G.’’

Spark separately increased the price of its copper broadband services by $5 a month last month, in a price hike that has affected about 350,000 households.

Vodafone spokeswoman Kathy Gieck indicated it shared Spark’s sentiment.

‘‘Unfortunately, the wholesale price increases for fibre by Chorus and other local fibre companies have been and will continue to increase, which will continue to put pressure on current pricing.’’

Moutter put the heat on the Government to release radio spectrum for future 5G mobile services ‘‘as soon as possible’’.

‘‘In particular, the Government should move to allocate the C-band and mmwave bands as soon as possible, to ensure 5G services can be up and running in time for the 2020-21 America’s Cup in Auckland. Australia will auction its C-band spectrum this month,’’ he said.

‘‘If we don’t start to make spectrum policy decisions quickly we will be left behind in the race to 5G by our close neighbours.’’

Moutter also urged the Government not to bar Chinese network operator Huawei from providing equipment for 5G – after Faafoi indicated in response to questions that was a possibility.

Moutter said: ‘‘We would hope that our Government would not preclude them [Huawei] from being considered without incontrovertible evidence their technology presents security risks that the comprehensive security management tools we employ in our networks cannot mitigate.’’

Spark chairman Justine Smyth said Spark was undergoing a major change as it adopted Agile as a way of working.

‘‘It’s become clear to us that the traditional, hierarchical model of management will not work for the workplace of the future,’’ she said.

Moutter said the ‘‘rise of artificial intelligence’’ would mean some jobs would disappear.

‘‘Spark and other New Zealand organisations have to ensure our people have the opportunity to upskill and continue doing meaningful work. We will continue to engage with both government and with other large businesses.’’

‘‘The retail prices we charge don’t allow for anything like an acceptable margin.’’

Simon Moutter of Spark