Cellphone market to be probed

Tex Edwards

The Commerce Commission is to examine the mobile phone market, and the reasons for the lack of new entrants into mobile services.

In the latest blow to Telecom, the commission said yesterday that the study would help decide whether to launch a formal investigation into possible changes to the regulations governing the mobile market.

"Praise the Lord", said Tex Edwards, chief project director for South African company Econet, which is developing a third mobile network.

The mobile market is split between Telecom and Vodafone, with the latter having a slight edge.

The commission's announcement was foreshadowed in last week's leaked Cabinet paper containing plans to open Telecom's fixed-line network to competitors - news which savaged Telecom's share price.

Telecom shares closed down 12c at $4.68 yesterday - their lowest close in about three years.

David Borthwick, manager of the commission's network access group, said the decision to start inquiries into the lack of new entrants was made independently of the Government.

Last month, the commission recommended regulation of mobile termination rates - fees mobile operators charge fixed phone services to end calls on the mobile networks.

Borthwick said that, as part of the termination rates investigation, the commission had also looked at mobile services more generally.

A range of issues, including high retail prices by OECD standards, had prompted it to initiate the wider inquiries announced yesterday.

The ability of phones to "roam" between networks and co-location of companies' equipment at cell sites were among the issues to be studied.

Communications Minister David Cunliffe declined to comment, saying he did not want to seem to be trying to influence the commission. "I don't think you have a dog and bark too."

Government policy would be "informed by their views and our own research as well", Cunliffe said.

Telecom's government and industry relations general manager, Bruce Parkes, declined to say whether Telecom was concerned at any implication that the study could lead to its being forced to help new entrants.

Vodafone said it welcomed an "objective investigation of the facts".

TelstraClear spokesman Mathew Bolland said: "This is the kind of momentum that is needed to address the wider market."

Last year, TelstraClear shelved plans for a third mobile network, saying the wider telecommunications environment was not conducive to such investment.

The commission said it expected to complete its study within a few months.

If it decided to launch a formal investigation, a report with any proposed changes would be given to Cunliffe after the probe was complete.

Econet's Edwards said his operation was starting to develop mobile infrastructure in Auckland but would not start offering services here until the "road rules" were fixed.

He said Econet's frustrations included not being able to get wholesale co-location, even though it had been trying for five years, or a roaming agreement.

He wanted legislation to sort out mobile competition rules enacted at the same time as that affecting broadband.