Phone callers pay through the nose

By PAUL BRISLEN

New Zealand phone calls are among the most expensive in the developed world, says a new report from the Ministry of Economic Development.

The report looks at the cost of communication service in three areas: fixed line, mobile service and broadband internet.

Mobile calls were ranked as the second most expensive of the 30 countries surveyed. Only Poland's cost more.

Ernie Newman, chief executive of the Telecommunications Users Association, said the report showed users had been justified in their complaints over the past decade.

"We knew it was bad but this shows us just how bad it truly is."

The report says the price of "the cellular basket of services was 46 per cent or higher than the OECD average".

The report estimates how much prices would have to fall to get New Zealand into the cheapest quarter of OECD countries - a goal that Communications Minister Paul Swain wants to see achieved.

Broadband internet users are also not well served in New Zealand. Prices for entry-level residential users would need to be cut by almost a quarter to achieve the minister's goal.

Business users are hardest done by: low data users would need an 80 per cent price reduction, while medium users are paying 160 per cent above the OECD average.

Residential local calls rate best. "New Zealand's relative pricing performance ranks in the top quartile of the OECD," says the report. But it argues that business users would need to see a 38 per cent price cut to make it into the cheapest quarter of the OECD.

However, Telecom's general manager for Government relations, Bruce Parkes, said the company had concerns about several aspects of the report.

"We have questions about the exchange rate process that's used to compare New Zealand with other countries."

Parkes also said the broadband figures were out of date.

"None of our new plans or our wholesale offers will be included in those figures."

He also pointed out the impact of the Kiwi Share Obligation on the figures.

"New Zealanders make far more local calls on landlines than they do on cellphones and why wouldn't you? That skews the landline figures and the cellphone figures dramatically."

The Commerce Commission is already investigating the price of mobile call charges in New Zealand and the ministry report suggests the high price of calling has restricted demand for cellular services.