PROJECTS

Advice to Spark on Fiber Regulation, New Zealand

The problem

New Zealand’s largest retail telecommunications provider (Spark) was worried about losing market share in the fixed-line broadband market. New regulation proposed an increase in access charges to the fixed-line network owned by the national network service provider (Chorus). If prices increased there was a risk that Spark’s premium customers would no longer be able to afford premium services and would trade down to services offered by discount providers.

How we helped

Castalia developed a model to assess how the new access charges would affect full-service providers in comparison to discount providers. We modelled Spark’s revenues under different assumptions of competitor behavior in response to the proposed pricing changes.

Impact

Based on our analysis, Spark made a submission to the Parliamentary Select Committee which was considering legislation that would underpin the new regulatory model. Because of the submission, among other efforts, broadband prices went up less than feared. The threat to Spark was diminished, and the public benefitted because of lower broadband prices.