13 May 2010

Regulation would cut mobile phone call prices - analyst

9:37 am on 13 May 2010

Most consumers would enjoy lower-priced mobile phone calls if the Government regulated the cost of switching mobile phone calls between networks, a telecommunications analyst says.

The Commerce Commission has changed its stance on the issue, and is now recommending the Government regulate mobile termination rates rather than leaving the industry to govern itself.

The commission has revised its advice because of a new calling plan offered by Vodafone that allows substantially cheaper calls between customers on its own network, than for customers calling a rival network.

The regulator is now arguing for cost-based rates, saying that's the best way to ensure vigorous competition.

Last year, the commission's draft report suggested dropping mobile termination rates for calls from 15 cents per minute to to 3.8 cents by 2015, and texts from 10 cents to 0.5 cents each.

Telecommunications analyst at Forsyth Barr, Guy Hallwright, says it's hard to estimate how far prices would fall under regulation.

Regulation elsewhere has brought prices down, he says, but companies have passed on differing amounts to customers, while the strength of competition also plays a part.

Depending on how much is passed on to consumers and demand, Mr Hallwright estimates Telecom may lose in the low tens of millions of dollars, while Vodafone will face heavier losses.

Consumer New Zealand chief executive Sue Chetwin, who is also part of a group that's been lobbying for regulation, says the Government could regulate within months if it wanted to, which would ultimately benefit consumers.

As well as bringing the price of calls down, she told Morning Report, cost-based regulation also allows other competitors to enter the market, bringing costs down for everyone.

Submissions on the draft ruling are due by 19 May and the Commission hopes to get a final report to the Communications Minister, Steven Joyce by early June.

Mr Joyce says he'll make a decision in a timely manner once he has received the final report.