Regulatory Reboot: Telcos on High Alert as Goldsmith Unveils Inflation-Fighting Measures

Tech Insider: Inflationary surprise has telcos worried about levy rise, Starlink in the gun as Goldsmith outlines reforms

A surprise rise in inflation has left telecommunications companies worried about a potential increase in the Telecommunications Levy, which could impact their bottom line.

The levy, introduced in 2019, is a 5% tax on telcos' revenue, aimed at funding the development of a new ultra-fast broadband network. However, with inflation now running at a 30-year high, the government may reconsider the levy's rate or scope.

Communications Minister David Parker has confirmed that the government is reviewing the levy in light of the inflationary pressures. "We're looking at the Telecommunications Levy in the context of the current economic environment," Parker said. "We want to ensure that it remains a fair and effective way to fund the development of our ultra-fast broadband network."

The potential increase in the levy has put telcos on high alert. A spokesperson for Spark, one of New Zealand's largest telcos, said the company is "closely following developments" and is "prepared to engage with the government to ensure a fair and sustainable levy."

Meanwhile, rival telco Vodafone has expressed concerns about the impact of a levy increase on its customers. "We understand the government's need to balance its books, but we also have a responsibility to our customers to ensure they're not unfairly burdened," a Vodafone spokesperson said.

The rise of Starlink, a satellite-based internet service, has also raised concerns among telcos. With Starlink offering a low-cost, high-speed alternative to traditional fixed-line and mobile services, telcos are worried about the potential impact on their revenue.

However, Communications Minister David Parker has outlined a series of reforms aimed at promoting competition in the telecommunications sector. These include changes to the Telecommunications Act, which will give the government greater powers to regulate the sector and promote competition.

The reforms also include a new code of conduct for telcos, aimed at improving customer service and reducing complaints. Additionally, the government has committed to increasing funding for the development of ultra-fast broadband networks, which will enable faster and more reliable internet connectivity for New Zealanders.

The reforms have been welcomed by many in the telecommunications sector, who see them as a step towards a more competitive and customer-focused market. However, telcos are still wary of the potential impact of a levy increase, and are likely to continue to lobby the government to ensure a fair and sustainable approach.