The Commerce Commission is recommending that the Government does not regulate over mobile phone termination charges.
In a 2-1 decision, the commission said undertakings given by Telecom and Vodafone to reduce rates gradually should be accepted.
Termination prices are the wholesale fees mobile phone companies charge for switching phone calls between networks. Telecom and Vodafone plan to reduce mobile termination rates by 60% by 2014.
Under the deal, the companies will drop mobile termination rates from approximately 15 cents to 6 cents per second by the end of 2013. For texts, prices will drop from 9.5 cents to zero.
Telecommunications Commissioner Ross Patterson says the long-term interests of consumers are best served by allowing market forces to operate outside of regulation.
Mr Patterson says the charges suggested by Telecom and Vodafone are significantly lower than those first offered, and though the rates remain above the commission's benchmark, they address concerns over competition.
While Mr Patterson and Gowan Pickering favour the less intrusive approach, another commissioner, Anita Mazzoleni, believes voluntary steps do not go far enough and new entrants will still be disadvantaged.
Public submissions are being sought. The commission's recommendation now goes to the Minister for Communications and Information Technology for a decision.
Big players happy, others not
Mobile phone companies are at odds over the Commerce Commission's decision not to recommend regulation of mobile phone termination rates.
The decision has been welcomed by the big players, but not the newest operator to the New Zealand market.
Telecom believes the Commerce Commission's decision is good news for consumers, saying it has long held the view that an industry solution was best in a market that is already characterised by growing competition and high levels of investment.
Telecom believes consumers will be best served by a less intrusive way of addressing concerns over competition.
Vodafone says market forces over regulation is always the best way to go and it believes the commission's decision is pragmatic and the right one. However, it will still mean an $80 million reduction in revenue for the UK-based giant.
However, small operator 2degrees says the decision is skewed in favour of the large operators and threatens the company's ability to compete with Telecom and Vodafone.
2degrees chief commercial officer Bill McCabe says his customers can call any country for 22 cents a minute, but his company is charged a wholesale price of 44 cents a minute for calls to any Telecom or Vodafone number in New Zealand.
Mr McCabe says for an effective and efficient competitive industry, the charge should be at cost.
Telecommunications Users Association chief executive Ernie Newman says though the reduction in cost being offered by the companies appears generous, it is still insufficient to address the barrier to competition posed by excessive charges.
