Telecommunication companies are not promising cheaper cellphone charges for customers, despite cuts to mobile termination rates.
The Commerce Commission on Thursday ordered a sharp reduction in the rates companies pay each other for calls and text messages between networks.
The commission says by April next year, the wholesale cost for a telco to call a competitor's network will fall from about 15 cents a minute to less than 4 cents a minute.
From Friday, the wholesale cost of sending a text message between networks will drop from about 9 cents to 0.6 cents.
The Commerce Commission believes cutting termination rates should boost competition in the telecommunications sector and lower prices for customers.
Commissioner Ross Patterson says the gradual reduction in termination rates will allow mobile companies time to adjust their prices.
However, it does not appear that cuts to wholesale rates will be passed on to consumers as lower retail prices.
2Degrees and Telecom and say they have already factored in the cuts to pricing plans they have previously announced.
Vodafone says it stands to lose about $70 million in profits from the cuts to termination rates and is planing to ask for these to be reviewed.
NZ 'in line' with other countries
Advocate group Consumer New Zealand says the changes to mobile termination rates bring New Zealand into line with other developed nations.
Deputy chief executive David Naulls says the new rates could cause people to move from mobile contracts to becoming pay-as-you-go customers.
Mr Naulls says while new mobile phone contract plans are likely to be cheaper, pre-paid calling rates should also reduce.
People should compare the plans and pre-paid rates offered by all the mobile network providers before renewing their contracts, he says.
