Ihug, Callplus want broadband pricing model changed

Telecom rivals ihug and Callplus have asked the Commerce Commission to change its pricing model for determining the wholesale fee Telecom charges its customers.

Ihug estimates it loses $10 a month per broadband customer and yesterday said it had applied to the commission seeking "clarification on the interpretation and application of the pricing principle" it used.

In June, the commission set the wholesale price for unbundled bitstream access - which Telecom's competitors use to provide their own customers with broadband - at $28.04.

Then in late October, the commission dropped the price to $27.76.

But Telecom's rivals have said they would still lose money selling broadband at the new and slightly lower prices. They argue the prices are too high to allow them to make an adequate margin after reselling to retail customers.

Ihug has complained the commission's price was still above Telecom's Xtra broadband retail prices, which showed the commission's model to determine the unbundled bitstream price was "totally flawed".

Ihug regulatory manager David Diprose said the commission's method was "totally irrelevant" because it did not take into account the changes to the scope of the broadband product and how that impacted on Telecom's competitors.

CallPlus chief executive Martin Wylie said it would ask the commission to review its pricing model.