Juha Saarinen: Telcos scoring point or own goals?

Plenty for telcos to mull over this Christmas. Photo / iStock

Christmas is nigh, and the Commerce Commission gave many New Zealand telcos and Internet providers a present to mull over for the festive season: the final decision on how much they'll pay towards the $50 million Telecommunications Development Levy for the 2014-15 year.

Also known as TDL, the levy is charged at around one per cent of telco annual services revenue, with providers who earn more than $10 million a year being liable for the charge.

Around 90 per cent of the TDL comes from the big three players in the telco market, Vodafone, Spark and Chorus.

The TDL pays for telecommunications infrastructure, the 111 emergency service, rural broadband, and the relay service for deaf and hearing impaired people and that seems a good thing, surely?

Having heard the TDL wasn't popular with telcos, I asked an industry insider who is shy about being named and received a sweary reply that they absolutely hate it.

How much? So much so that both Spark and Vodafone have started charging customers 99 cents a month each for on-account mobile, fixed line broadband and landline service, as a TDL "contribution".

Actually, it's 85c plus GST, and the telcos never used to itemise the "contribution" on bills until the 2015 budget year, which saw the government extend the TDL from 2016 to 2019.

Vodafone says this isn't to boost the company's profits, but to "make these costs more transparent to our customers."

This is the same Vodafone that apparently paid just $1.6 million in tax in the 2014 financial year on just under $2 billion revenue and whose retail plans are anything but transparent.

Spark tried to offer up an explanation on its website but there is no page at the link provided in their bills. Searching for the Telecommunications Development Levy on the Spark website lead to a typo but no further insight as to why customers should pay for it as a separate item:

This is a political statement by Spark and Vodafone, of course.

Big companies in natural monopoly positions that are hit by government surcharges they don't like tend to behave in this fashion, as if they've been forced to act as tax collectors for governments.

Spark said in May this year that it would charge customers a dollar a month for the TDL.

I'm not sure what either telco is hoping to achieve with this passive aggressive protest though. Is it for instance fair that everyone pays a flat 99 cents a month charge towards the TDL, instead of a percentage of the bill total?

Does the TDL "contribution" from customers cover the cost of the TDL to the telcos?

Do the two object to contributing towards the 111 service and the hearing impaired relay and rural broadband through the TDL, and is this what they're seeking to raise awareness of?

There are plenty of other imposts on telcos such as the cost of implementing lawful wiretapping with expensive hardware under the 2013 Telecommunications Interception Capability and Security Act or TICSA, but you don't see those itemised on your bills.

While the 14 cents GST a month of the "contribution" will obviously go into government coffers, the 85 cents remainder should count as additional revenue for the telcos - being a price increase to customers - and will presumably increase Spark and Vodafone's respective TDL liabilities even more.

Most of all, did either telco consider how much this sort of pettiness over a relatively paltry $50 million annoys New Zealand customers who already pay high charges for telecommunications services?