Commission recommends controls on landline to mobile calls

The Commerce Commission says the price of calls from landlines to mobile phones should be controlled, and extended its recommendation to new third-generation (3G) mobile networks.

The government had asked the Commission in August to rethink an original recommendation to regulate mobile termination costs - fees charged by telecoms firms to connect a landline call to a mobile network - after Telecom and Vodafone offered to reduce voluntarily rates.

But the Commerce Commission said regulation was necessary to lower prices, which were significantly above cost.

"The commission continues to believe that regulation will bring substantial benefits to businesses and consumers making fixed-to-mobile calls," Telecommunications Commissioner Douglas Webb said in a statement.

The regulator estimated the cost of mobile termination was about 15c a minute, 44 per cent lower than the 27c a minute currently being charged.

The commission said it had changed its view to include controls on 3G networks after an extensive roll-out of 3G technology, having earlier considered regulation would be a barrier to investment.

The initial price for mobile termination would be set by benchmarking against other comparable countries, and the final price by forward-looking, cost-based modelling.

The commission expects to send its final recommendation to the government in the first quarter of 2006.

Shares in Telecom last traded down three cents, or 0.5 per cent, at NZ$5.86, having traded between NZ$5.58 and NZ$6.61 over the past year

- REUTERS