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Rural fixed wireless costs three times urban price

Spark charges unlucky rural customers almost three times as much as city dwellers for fixed wireless broadband.

The banner price for Spark’s Everyday Wireless plan is $60 a month. For that you 4G fixed wireless broadband and unlimited data. There are contracts, but you can get an open term deal meaning you can go elsewhere when you choose without a penalty.

Meanwhile Spark’s Naked Rural Wireless plan costs $176 a month if you use an antenna and $166 if you don’t.

Naked Rural Wireless is built on the same 4G technology as the Everyday Wireless plan.

Rural fixed wireless data caps

There is a data cap of 300GB. If you want more data, that costs a dollar per gigabyte.

To get Naked Rural Wireless you have to sign for a 24 month contract. If you want to leave before the contract finishes there is a $350 early termination fee.

Vodafone has a $65 a month unlimited 4G wireless broadband plan for urban customers. It sells rural plans through its Farmside subsidiary. A rural plan with a 200GB data cap costs $166 a month. Extra data is $20 for 15GB.

Broadband competition

In the cities and towns, Spark and Vodafone sell fixed wireless broadband in direct competition with fibre and copper based broadband services.

While there can be competition in rural areas, that isn’t always the case. In effect there are places where Spark and Vodafone have a local broadband monopoly.

To be fair. It costs more to provide telecommunications services to rural areas. There is more low-hanging fruit in urban areas.

Yet it doesn’t cost three times as much to service a rural customer. In many cases a government subsidy helped pay to build rural towers.

Wireless Internet Service Providers

Wireless Internet Service Providers or Wisps offer rural services in competition with Spark and Vodafone-Farmside.

They tend to be small, regional players. This makes it hard to compare their prices directly with Spark and Vodafone-Farmside,

Yet in places, they can offer a similar fixed wireless product at a lower cost.

At the time of writing Taranaki-based Primo has a $99 rural wireless plan with 250GB. The company’s unlimited plan is $149.

Filling the rural broadband coverage gaps

Wisps, do a great job filling in the rural broadband coverage gaps. Anecdotally they are more popular with customers than the large telcos and are more flexible.

Prices for fixed line telecommunications services are the same throughout New Zealand. This applies to the UFB fibre network and the copper phone network.

The idea that everyone pays the same is part of the Telecommunications Act. In legal terms it is known as non-discrimination.

Another idea that’s important is known as equivalence.

Can’t play favourites

In plain English non-discrimination and equivalence mean network operators can’t play favourites. They can’t favour partners or wholesale customers, even if they are part of the same business.

Chorus has to give equivalence and non-discrimination undertakings to the Crown on its copper network. All the fibre companies do the same on the UFB network.

There are similar undertakings for the Rural Broadband Initiative covering Chorus, Vodafone and the Rural Connectivity Group. There are no undertakings for Wisps.

In effect, Vodafone can’t charge other telcos more to use its rural towers than it charges its own retail business. This should encourage competition.

Fierce competition in towns

As things stand in early 2022, the competition for urban broadband is intense. Prices are stripped back, margins are lower and customers get great deals.

Out of town the competition can be less intense. In many rural places there is a limited range of options, if any. And customers can need to join a waiting list to get a connection.

Fresh competition from low earth orbit satellites like Starlink will give the market a shake. We’re not seeing that make a huge impact yet. Give it time.

Government could give many rural customers better broadband options by extending the fibre footprint. Soon New Zealand’s UFB fibre network will reach 87 percent of the population. Realistically the fibre footprint could extend further, say to 92 percent or more.

It will cost money, but it would be a powerful nation-building investment. We managed to foot the bill building a New Zealand-wide copper network when there was far less money around.

Yet, for now, unlucky rural fixed wireless broadband customer have to pay three times as much, can consume less data and face stiffer contracts than their urban cousins. We can fix this.

14 thoughts on “Rural fixed wireless costs three times urban price

  1. It costs more to provide telecommunications services to rural areas.

    This is somewhat incorrect.
    It costs more per person/line to provide telecommunications services to rural areas.

    Rural areas simply don’t have the economies of scale that suburbia has. Increasing competition won’t change that. In fact, increasing competition will increase the costs due to the increased management and resources that it requires.

    The increased amount that people in the rural sector are a direct result of what they wanted – a market system without subsidies. A system where users paid for what they wanted.

    If people want what we had before selling Telecom then we’ll need to go back to a state monopoly and the massive subsidies of suburbia covering the costs of rural NZ.

    The idea that everyone pays the same is part of the Telecommunications Act. In legal terms it is known as non-discrimination.

    And?

    It doesn’t mean that a business has to give some customers subsidies from other customers. Basically, there’s no way that a private sector business is going to have a look at the costs of one sector of their business and start channelling the profits from another sector to prop it up. Especially when there’s competition in the other sector that’s keeping prices down which doesn’t exist in the sector that needs the subsidy.

    Basically, if you want everyone to pay the same price for their home/business communications then we need to go back to a state monopoly where such cross subsidisation is acceptable.

  2. Good coverage of the problem I face. It is important to realise that rural does not mean remote, I am a few moments drive from Tauranga in an intensively settled horticulture area where most residents do not live in the towns such as Katikati and Te Puke but on small blocks. Local towers have been “stop sell” for years so we are trapped in a data capped virtual monopoly with a wireless provider yet urban residents are freely connected to the same towers at a fraction of the price or have the choice of full UFB. The “rural broadband” definition seems to just be a block on the UFB expansion to urban fringe areas.

  3. Why no mention of STARLINK? NZ$159/month for unlimited, mostly 250-300 Mbps down, 20-40 Mbps up. I ordered mine Jan 3, received it (from Los Angeles) on Jan 14, up and running 30 min later.

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