Smaller telcos promise to pass on broadband price cuts to users

Orcon CEO Greg McAlister and Kim Dotcom. Photo / Richard Robinson

Some internet companies are promising to pass on a big chunk of a price cut announced yesterday, with Orcon saying its customers could save around $7.50 a month on their broadband bill.

The Commerce Commission announced a wholesale broadband price cut yesterday of 23 per cent, which would come into effect from December next year.

The prices are what infrastructure company Chorus charges internet retailers such as Vodafone or Orcon to access lines and provide broadband services over the copper phone network, which they then on-sell to customers.

Orcon and Slingshot have promised to pass on the savings to consumers.

Orcon chief executive Greg McAlister said the company would cut broadband prices "dollar for dollar", taking into account any extra costs the company faces.

"Any savings we see will be passed through directly to our customers ... the lower the regulated price of broadband, the lower the price of Orcon broadband," he said.

The commission announced the new wholesale prices for copper broadband services of $34.44, which is more than $10 less than today's charges. Because some of the company's other wholesale charges were due to go up around the time when this price cut was due to happen, Orcon said it would "average this all out and pass on any savings".

This could be as high as around $7.50 a month for each customer, an Orcon spokesman said.

Slingshot chief executive Mark Callander said competitive pressure would force other internet retailers to bring their prices down. "It's not just our customers who will benefit. I think we'll force a competitive move in the market."

Bigger telcos did not offer the same commitments.

"Given the intense retail competition in the broadband market, we expect that to continue with reduced costs flowing through to customers. How and when is too early to say," a Vodafone spokeswoman said.

A Telecom spokesman said it didn't plan "on letting competitors in on our pricing plans" until after the price cut was implemented.