Mobile phone regulation rejected by commission

Telecommunications commissioner Ross Patterson has recommended to Government that proposals put forward by Telecom and Vodafone are a suitable alternative to regulation. Photo / Mark Mitchell.

The Commerce Commission, in a split decision, has rejected regulation as a means to reduce the costs of mobile phone calls.

Instead, telecommunications commissioner Ross Patterson has recommended that Minister for Communications and Information Technology Steven Joyce accept proposals put forward by Telecom and Vodafone as an alternative to regulation.

He was backed up by associate commissioner Gowan Pickering, but the other commissioner, Anita Mazzoleni, believed mobile termination access services should be regulated.

The commission today delivered its final report on mobile termination access services, which are the wholesale charges mobile phone companies charge for terminating calls or texts from other land line or mobile networks.

New Zealand's rates have been criticised as being too expensive. During the commission's 15-month investigation both Telecom and Vodafone offered their own plans to reduce rates over time.

"The long-term interest of consumers will best be served by applying the least intrusive means to address the competition concerns identified in the investigation. This will allow market forces to continue to operate in areas outside the scope of intervention," said Patterson.

The final undertakings from Vodafone and Telecom offered mobile termination rates that were significantly lower than those offered in earlier undertakings. While these rates remained above the range of the commission's cost-based benchmarks, they addressed the competition concerns, he said.

However, Mazzoleni said that while Telecom and Vodafone's proposals would deliver a reduction in mobile termination rates three months earlier than under regulation, the rates would remain significantly higher than the commission's benchmarks over the five year period of the undertakings.

"The barrier arising from the prices in the final undertakings continues to ensure an uneven playing field, and this will impede the benefits competition will otherwise deliver to New Zealand consumers."

A news release issued by Vodafone this morning says the company "welcomes the Commerce Commission's recommendation to accept the industry's commitment to reduce Mobile Termination Rates (MTRs)."

Vodafone New Zealand GM of Corporate Affairs Tom Chignell said the outcome was "a pragmatic one given the uncertainty around a long regulatory process and whether the savings will end up in consumers' pockets."

"We have always preferred commercial outcomes to regulation. New Zealand's rates are broadly in line with Europe's rates already and through this, and the previous investigation, the Commission has managed to elicit massive voluntary reductions in termination rates for voice and SMS."

"The Minister will now decide whether or not to accept the Commission's recommendations and Vodafone urges him to make that decision so we can get on with the business at hand - making sure Vodafone customers have access to the best services on the country's reliable 3G network."

- NZPA / NZ HERALD STAFF