Editorial: Self-regulation? Yeah, right

Photo / Janna Dixon

Despite the winds of competition blowing through the telecommunications industry, the cost of operating a mobile phone has been remarkably resistant to downward pressure.

The two dominant players in the market, Telecom and Vodafone, sing in unison about their inability to lower prices - in particular the "mobile termination rates", the prices they charge other networks to connect with theirs.

The newest arrival in the market, 2degrees, has shown itself to be something of a giant-killer, effectively halving - even, subject to certain conditions, quartering - the cost of calling and texting.

And all of a sudden, the major telcos have discovered a hitherto-unseen capacity to cut their charges. This week Vodafone cut its international roaming charges.

It might seem like a case of the market working perfectly, but Anita Mazzoleni isn't buying it. As one of the commerce commissioners, she expressed a minority view when the Commission's report on termination rates was released in February, arguing that the state needed to step in and regulate a market where prices were being kept artificially high.

Vodafone and Telecom have protested that self-regulation will suffice and the Commission's majority view is that we should accept the undertakings made by the two majors, which will lead to a gradual reduction in prices.

But the continuing use of so-called on-net pricing - which makes it much cheaper to call customers on the same network than on rival networks - gives the lie to that. The practice, illegal in many overseas countries, is anti-competitive to the point of being oppressive.

Our mobile phone charges are among the highest in the OECD and much higher than in many countries in the developing world where infrastructure is much less developed. If the companies won't move - and move fast - then regulation is the only way.