30 Jun 2009

Watchdog advises regulating mobile termination rates

6:12 pm on 30 June 2009

The Commerce Commission has recommended that mobile termination rates should be regulated.

Mobile termination rates are the prices mobile companies charge each other to connect calls. They heavily influence the retail cost of fixed to mobile and mobile to mobile phone calls.

New Zealand's two main mobile companies, Telecom and Vodafone, and a third company, 2degrees, have argued against regulation. This has been rejected by the Commerce Commission.

In a draft report, the commission says mobile termination charges are significantly above cost. It recommends regulating termination rates, rather than the price paid by consumers to bring down charges.

A commissioner, Anita Mazzoneni, says if wholesale services were priced at cost it would promote competition, which would bring down prices.

The commission's telecommunications director, Osmond Borthwick, says wholesale charges set in commercial agreements are too high and will hinder the ability of 2degrees to compete.

The company is due to launch its phone service in New Zealand in August.

The Commerce Commission report will be made available for consultation. Telecommunications companies can submit revised undertakings on mobile termination rates before the end of July.

Meanwhile, the commission says it is also looking at whether it needs to set prices for companies to use or roam on each others' mobile networks. It will start an investigation into national roaming in August.