Govt sets sights on mobile phones

Prime Minister Helen Clark yesterday put the regulation of mobile phone companies firmly on the agenda, underscoring the Government's bid to lift the performance of the national telecommunications infrastructure.

Less than a week after revealing plans to open Telecom's fixed line network to competitors, Clark told Newstalk ZB: "[Mobile] is going through a long dance at the regulatory process. We just have to change the rules of the game."

Cabinet documents released last week outlining the Government's proposals to clamp down on Telecom also show it is planning a major review of the mobile sector.

The papers say the Government's recent review of telecommunications had highlighted the following outstanding issues:

* New entrants' inability to use other operators' networks.

* Operators' failure to share cell sites.

* The failure of resellers of the incumbent's networks to emerge.

In many other markets such developments are commonplace.

"The Telecommunications Commissioner intends to undertake a stock take of the issues surrounding new entry into the sector in order to prioritise his future work programme," the Cabinet paper says.

Clark continued that theme yesterday.

"How many times have we heard that there's a draft decision, a round of consultation on those mobile termination rate issues? It really is an extremely cumbersome system that New Zealand has. We need to cut right through that."

The Commerce Commission late last month recommended regulation of mobile termination rates - the fees that mobile operators charge fixed phone service operators, such as Telecom and TelstraClear, to end calls on the mobile networks.

In international benchmarking, the commission found the rate should be about 15c a minute. Telecom says its present fixed-to-mobile call rate is 22c a minute.

The commission believes the regulation could save customers between $46 million and $63 million over five years. It is taking submissions until May 22.

The Government's concerns are bound to strike fear into the hearts of the dominant mobile players, Telecom and Vodafone. Both have claimed they have invested substantial sums in their networks and should therefore be allowed unfettered access.

Vodafone worldwide has had a blanket ban on allowing other operators to use its network. It said yesterday: "We will continue to engage with the minister on the matters raised in the Cabinet paper and work collaboratively with the Commerce Commission and Government."

Telecom said: "We are looking at this proposal as with all the other details to work through the implications".

Its shares closed last night up 20c at $4.92, still well off the $5.55 before the Government revealed its plan to open up its fixed-line network to other operators. This has wiped as much as $1.6 billion from its market value.