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Home / Business

Chorus confirms broadband price hikes - the plans that will escape

Chris Keall
By Chris Keall
Technology Editor/Senior Business Writer·NZ Herald·
5 Jul, 2022 05:33 AM4 mins to read

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For most of us, our internet bills are about to rise.

UFB fibre operator Chorus has today notified Spark, Vodafone, 2degrees and other retailers that it will be raising the wholesale prices on the most popular internet plans from October 1.

The wholesale price of the most popular fibre plan, 300/100 (which accounts for around 70 per cent of residential connections), will increase by 5.5 per cent to $50.50 per month, while the entry-level 50/10 plan will rise 6.9 per cent to $47.30 per month.

After Chorus warned of that level of price hike during a consultation period, retailers told the Herald they would have little choice but to pass it on to consumers, given the increased costs they were facing across the board.

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However, Spark, Vodafone and 2degrees are pledging no price increases for their wireless broadband plans, which use their own wireless networks to deliver fast internet into a home or small office, cutting Chorus out of the picture.

For its part, Chorus says it will hold the price of its new Starter Fibre plan - aimed at light internet users - at $38 per month, but only as long as retailers pledge to sell it for $60 per month or less.

That pitch will appeal to some retailers more than others, given Spark, Vodafone and 2degrees will be wary that the keenly priced Starter is aimed at their wireless broadband plans - particularly as they expand their upgrades to faster, more capable 5G service.

And to pull power users' eyes firmly from 5G fixed-wireless, Chorus has actually cut the cost of its superfast HyperFibre plans, and damped the price increase on its Fibre Max to just 3.6 per cent.

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Chorus operates the lion's share of UFB fibre. Smaller regional players have already increased their prices. Tuatahi First Fibre (formerly Ultrafast Fibre), which offers UFB fibre in several central North Island towns, increased its wholesale rates by 4 per cent from July 1. Enable, which handles Christchurch, put up its wholesale rates by 5.9 per cent from the same date.

On the retail side, Spark has already told customers it will be increasing the price of its copper and fibre broadband plans by between $3 and $5 per month from July 29.

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Vodafone is set to follow suit.

"In almost four years we haven't raised the price of our broadband plans," said Vodafone spokesman Matthew Flood.

"But we are unable to continue absorbing increased costs, including those charged by third-parties to connect via their fibre networks, in the way we have done in recent years.

"We will be communicating details of price increases on fibre to customers in the near future. It is important to note we have committed to freezing prices on FWA [fixed-wireless access, aka wireless broadband] and HFC [cable service in parts of Wellington and Christchurch] for at least the next 12 months, and many customers will be able to avoid price increases by switching to these services."

For 2degrees (which now includes Orcon Group), chief consumer officer Taryn Hamilton said: "Chorus is our biggest supplier, so if it increases charges substantially, essentially we need to increase prices for services on that network."

Hamilton said the wholesale price used to make up about 60 per cent of a consumer's broadband bill. Now, with retailers competing with each other but Chorus enjoying a monopoly (albeit one heavily regulated by the Commerce Commission), that had climbed to 70 per cent.

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During the consultation period over the wholesale price increases, Hamilton told the Herald: "LFCs [local fibre companies] are crying poor when they have one of the sweetest business models going. They had interest-free loans to build a network, and that build is largely finished, and yet they insist they must annually increase prices, when the cost of broadband to Kiwis has been flat for years."

For Chorus, spokesman Steve Pettigrew said the new regulatory regime allows the company one price increase per year, and that it was facing real increases to its costs.

The new regulatory regime allows it one price increase per year.

"Chorus isn't insulated from the effects of inflation. There are increased costs for us throughout the supply chain from our service companies, freight, labour and increased electronic equipment costs," he said.

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