Editorial: Telcos' antics fooling no one

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The reaction of the telcos to the Commerce Commission edict that they must slash their mobile termination rates has been predictable.

The commission cut rates from 14c to 7c a minute for calls and from 9.5c to 0.06c for text messages, and they will fall further each year until 2014.

Unsurprisingly, Vodafone and Telecom say there is no reason for mobile call prices to fall as a result of the ruling - although charges for landline-to-mobile calls are likely to drop soon.

What is both surprising and disappointing is that the big players' public position is now shared by 2degrees, whose arrival in the market gave the duopoly the shake-up that regulators had failed to achieve.

2degrees, whose market share has almost trebled, to 11 per cent, in the past year, once howled about the mobile termination rates - the fees telcos charge each other for a call or text that originates from a rival network - calling them a barrier to competition.

Yet no sooner had the commission announced the reduction of the rates than 2degrees' chief executive, Eric Hertz, said that prices could come down over the coming months, but could not say when this would be.

It's a distinct change of heart from the man who said in December that mobile operators could afford to lower prices if the termination fees fell. It lends weight to Adam Smith's famous pronouncement that "people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices". It also makes one wonder what attitude the British-American company will take if, as some industry observers predict, it captures a third of the market.

2degrees can claim some moral high ground, since it has so consistently undercut, typically by 50 per cent, the other operators. Telecom and Vodafone have so such excuse. Having so strenuously resisted measures, including number portability, that would have opened the market to competition, they were not likely to take this lying down.

Vodafone, the largest mobile phone operator, is expected to appeal the decision, which it has described as "extreme" and "significantly below cost".

The company's head of public policy, Hayden Glass, tried to argue on Morning Report on Friday that, because termination rates were a cost when telcos incurred them and a revenue stream when they charged them, the change would be somehow fiscally neutral - an audacious piece of sophistry which suggests a dim respect for consumers' intelligence.

Telecom and 2degrees, meanwhile, are claiming that they anticipated the commission's move and, presumably as a sign of the good faith that has hitherto been so conspicuous by its absence, have already cut charges.

Customers who know a rort when they see one will be doing the maths over the coming weeks and will doubtless follow the suggestion of Telecommunications Users Association chief executive Paul Brislen - a poacher-turned-gamekeeper who used to have Glass' job - and pester their providers for a better deal

Failing that, they can vote with their wallets. There are plenty of players in the market, and it's the work of a few minutes to change providers these days. It's up to customers to ensure the chill winds of competition blow through an industry that has been sheltered from them for far too long.