2degrees complains over Telecom's locking of new phones

The Commerce Commission is looking into a complaint of alleged anti-competitive behaviour by Telecom. Photo / Greg Bowker

2degrees, the country's newest mobile operator, complained to the Commerce Commission after Telecom said it would impose "sim-locking" on customers of its new Skinny brand.

2degrees asked the Commerce Commission to obtain assurances from all New Zealand mobile operators they will not sim-lock their handsets.

"This is not about better handsets - improved competition is already driving down the cost of feature-rich smart phones," said Eric Hertz, chief executive at 2degrees. "This is a cynical move to lock in the most cost-sensitive consumers so they can't make a choice," Hertz said.

Telecom confirmed it will lock the phones of customers who buy its planned 'Skinny' product, forcing them to pay a fee if they want to leave. Customers on its XT network are exempt.

Hertz said customers should have the right to move between providers.

"We thought that this kind of monopolist behavior was a thing of the past, but there's clearly still a need for consumer protection from dominant players," he said.

2degrees grew out of a controversial government decision 10 years ago to give Maori the right to buy a third generation radio spectrum frequency at a discounted price. The remaining life of the spectrum management rights is about nine years.

2degrees shareholders include Trilogy International, Tesbrit and Hautaki Trust, who have provided ongoing equity capital to the start-up as it seeks to gain market share.

Telecom shares rose 2.2 per cent to $2.12 a share.