More bad news for Telecom

Telecom received another piece of unwelcome news today, with the Commerce Commission announcing it will look at reasons for the lack of new entrants in the mobile market, with an eye to more regulation.

The commission said it would begin gathering information from the industry and expected to complete the first phase of the investigation within months.

A report would be given to Telecommunications Minister David Cunliffe "with recommendations on any proposed regulatory changes".

Telecom lost another 11c to $4.69 this morning and is now just 2c shy of a three-year low struck last week after the Government announced plans to open up Telecom's fixed line network to competitors seeking to improve their broadband internet services.

The telco recovered some ground on Monday but came under selling pressure again yesterday after Prime Minister Helen Clark signalled the Government would regulate mobile phone termination rates.

Early last week, Mr Cunliffe released a Commerce Commission report proposing to regulate the prices charged by mobile phone operators for connecting to their networks and allowed three weeks for submissions before deciding whether to regulate.

On Monday, Helen Clark gave a strong indication the Government would act on that front.

Telecom and Vodafone delayed a decision on regulating termination rates last year by offering to voluntarily cut the cost of mobile phone calls.

But the PM told NewstalkZB the rules of the game had to change in the mobile market.

"How many times have we heard that there's a draft decision, a round of consultation on those mobile termination rate issues?" she said.

"It really is an extremely cumbersome system that New Zealand has. We need to cut right through that."

The local mobile market is a cosy duopoly between Telecom and global giant Vodafone.

Telecom's fixed line and internet rival, TelstraClear, resells Vodafone services.

TelstraClear abandoned plans to create its own high speed mobile network last November, with its Australian parent, Telstra, saying the returns on invested capital would not be good enough.

- NZPA