Here at NZ Compare, New Zealand's leading comparison website group, we have recently concluded an extensive analysis of broadband plan prices offered by the most popular providers in the country - including Spark and One NZ and the findings reveal a concerning trend - consumers who remain loyal to their existing broadband providers are paying significantly higher prices compared to those who regularly switch.
This emerging issue, often referred to as the "loyalty penalty," highlights the need for consumers to be vigilant and explore all the options to avoid overpaying for their broadband plans when providers increase charges in the middle of a contract term. When your broadband price increases you don't need to just accept it!
The broadband pricing table below gives you a quick comparison of the different levels of price for fibre broadband in New Zealand as well as the changes that will come with new price hikes from leading broadband providers.
In a landscape of increasing competition, more bundling with other utilities and advancements in broadband technology, it is surprising that a large number of consumers still maintain long-standing relationships with their current providers. While loyalty is admirable, it has become apparent that it comes at a cost, with many customers paying more than necessary for the same or similar services.
According to the research conducted by NZ Compare, more than 50% of fibre broadband customers serviced by the two biggest broadband providers in the country, Spark and One NZ are currently paying more than the competitive deals available to new fibre broadband subscribers through other providers. This gap in pricing between existing and new customers has raised concerns about fairness and transparency within the industry and the price increase for fibre broadband will put further pressure on struggling households.
Spark have put the increase in the price of their fibre broadband connection down to a number of factors. Quoting from the Spark website, "sometimes we need to review our plans and pricing to make sure we can maintain the level of service our customers expect. We face increases from Chorus* and other local fibre companies from time to time, and with other rising costs across the business, we have made the decision to adjust our copper and fibre broadband pricing."
Alternative technology, such as fixed wireless, may be cheaper, but the user experience on this connection type is a poorer experience. The leading providers of 4G fixed wireless in New Zealand have a vested interest in moving consumers to these plans as they retain all the revenue as they own the network directly. The independent “Measuring Broadband” report delivered by the Commerce Commission highlights these issues with 4G Fixed Wireless reporting lower download and upload speeds and the highest amount of latency (the delay your internet connection experiences - Important for video calls and online gaming) when compared with a fibre broadband connection.
One NZ will increase broadband prices from October 2, 2023. One NZ plans that are affected by the increase will be their consumer Unlimited Broadband Fibre, Unlimited Broadband Fibre Max, HFC, VDSL and ADSL consumer plans. Impacted customers will receive communications from One NZ with full details in mid-August and prices will increase between $5 and $7 per month - so up to $84 a year. Note, the One NZ price increase does not apply to their Fibre Starter plan, or Wireless Broadband plans.
Gavin Male, CEO of NZ Compare, commented on the findings, saying, "It is disheartening to see that loyal customers are being penalized with higher prices for their loyalty. Consumers should not be left to simply accept these price increases and we want to shine a light on the fact that you are able to cancel your contract, within a certain time period, without any early exit fees if your provider has increased prices. Kiwis shouldn’t be kept in the dark about better deals that are available in the market and at NZ Compare, we believe in empowering consumers with knowledge and choice, so they can make informed decisions about their broadband plans."
Male continued, “Bundling services is a trend that is becoming more common and there are potentially savings be made when consumers explore these options… but, Kiwis need to look at the whole picture. If you are getting heavily subsidised broadband then you are likely going to be paying more on your electricity but when you do the sums if you’re saving $400 or $500 a year on your internet than you could be making savings overall.”
It’s not just the popular, standard fibre connections where big savings are available. NZ Compare’s analysis found that those on faster speed tiers, such as gigabit connections, likely have the most to gain by switching providers. The most expensive gigabit plan listed on the Broadband Compare website is more than double the cost of the most affordable plan!
The disparity in pricing between loyal customers and new subscribers underscores the importance of regularly reviewing and comparing broadband plans. NZ Compare encourages consumers to take advantage of its user-friendly comparison platform, where they can easily compare various providers and plans to identify potential savings.
"We want to empower consumers to make the best decisions for themselves and their households," Male added. "Switching providers or renegotiating existing contracts can often lead to substantial savings. By comparing broadband plans on NZ Compare, customers can find the best value for their money without sacrificing the quality of service. There are so many options in New Zealand for broadband that I implore bill payers who have been with the same provider a long time to compare how much they can save."
In addition to benefiting individual consumers, NZ Compare's offering serves as a catalyst for change within the broadband industry. By bringing attention to the loyalty penalty issue, the company aims to encourage providers to offer competitive deals to both new and existing customers, fostering a fair and transparent marketplace.
