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Telecom's line rental charges keeping NZ voice prices up, says ComCom

Broadband prices are improving, but line rental charges mean voice prices remain above OECD average

New Zealand's broadband pricing is improving, but fixed line voice services cost significantly more than the OECD average, according to a report released by the Commerce Commission.

The report finds New Zealand residential consumers pay up to 42 percent more than the OECD average.

The key reason for the higher prices is Telecom's monthly line rental charge, and the lack of alternatives for users with low levels of voice usage, says the report.

Standalone broadband prices are on average six percent higher than the OECD, but 12 percent cheaper than what is found in Australia.

According to the Commerce Commission, this is a reflection of competition for broadband services and the impact of local exchanges being unbundled by internet service providers.

However, broadband which is bundled with traditional voice services is less competitive. The Commission says this may lead to consumers switching to internet voice services, bundled with broadband packages.

An example of this service is Orcon's Genius product which has had a phenomenal uptake from new customers, according to Taryn Hamilton, GM of retail at Orcon.

"We've been taken aback by the success of Genius, we're now into the tens of thousands of subscribers for it," says Hamilton.

"The customers are a mixture of existing and new, but the majority of them are new and coming from a competing service."

The report is the second conducted by the commission on telecommunication benchmarks, and is the first time it has compared broadband prices in New Zealand with that overseas.

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