Calls not so costly says Telecom

Landline calls in New Zealand are much cheaper than OECD numbers suggest, a Telecom report says.

New Zealanders enjoy the ninth-cheapest landline calls among 30 OECD countries when actual calling patterns are used, says the report.

Telecom commissioned the New Zealand Institute of Economic Research to compare prices after an OECD report last year found landline calls here were among the most expensive among the countries surveyed.

Bruce Parkes, Telecom general manager for government and industry relations, said the OECD report showed that current methodology unfairly ranked domestic landline prices.

"It won't be a surprise to anyone that when the OECD constructs an average basket, they don't look to a little country like New Zealand," Parkes said.

"They look to the larger countries that have a quite different pricing construct than us."

Free local calls, large calling areas, capped call costs, no peak rate or distance-based rates set New Zealand apart from many countries, he said.

Under the Telecom survey's measure, New Zealand's local calling area size came in first-equal among OECD countries, at 40km. Local calling areas in the US, Japan and Austria were the smallest, at 7km.

A Ministry of Economic Development report last year benchmarked fixed-line, mobile and broadband rates, leading to criticism of domestic costs - mostly mobile and broadband, but New Zealand also ranked poorly on fixed-line charges.

However, the ministry said modifying the OECD approach for fixed-line costs to take account of usage patterns raised NZ to the top quartile of countries.

Parkes said that "when you throw into the mix that all the calls within the large [local] calling areas are free for residential customers, we start to look a lot different".

The OECD has begun a review of the approach used for international comparisons.