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Costs of Govt's telco levy to to be passed on to consumers

Costs of Government’s Telecommunications Levy to be passed on to consumers

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

“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,” says Mr Moutter.

“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.”

“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. 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.

“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,” says Mr Moutter.

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.

ENDS

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