Australia Prime Minister Julia Gillard says a clampdown on mobile roaming charges is an example of how people benefit from closer relations between New Zealand and Australia.
Ms Gillard and New Zealand Prime Minister John Key made the announcement at their Closer Economic Relations summit in Queenstown on Saturday.
Ms Gillard says mobile phone companies should bring their roaming rates down further or face the consequences.
"They're on notice from this press conference today that we are going to give our competition people the ability to intervene in the market - clearly we would prefer it if mobile phone companies responded voluntarily."
About 1 million Australians visit New Zealand each year on holiday or business.
Currently, they pay up to $NZ24.60 per MB of data, about 92 cents for a text message, between $2.40 and $10.48 per minute for a phone call, and up to $49 just to send a photo back home via their mobile.
Mr Key earlier said roaming mobile charges have come down dramatically but they are still too high for New Zealanders and Australians travelling across the Tasman.
He said before the meeting that, over time, he would like to see the rates as low as domestic mobile charges.