Phone giants say call for price rules could backfire

The campaigners claim to represent hundreds of thousands of Kiwis who are being 'ripped off' by Telecom and Vodafone. Photo / Supplied

The "big two" of mobile phones say a campaign seeking regulation in their industry could result in phone users facing charges for receiving calls, minimum monthly spending caps and higher handset prices.

A "Drop the Rate, Mate" campaign aimed at Telecom and Vodafone was started in Wellington yesterday.

It is a joint effort by eight wide-ranging partners, including Federated Farmers, the Federation of Maori Authorities, Consumer NZ and the new mobile phone network 2degrees.

They say they represent hundreds of thousands of New Zealanders who are being "ripped off" by Telecom and Vodafone's "duopoly" in the telecommunications industry.

They say the "termination rates" Telecom and Vodafone charge each other when one network calls the other are too high, and are calling for regulation of the costs, even though rates have already dropped from 20c a minute to 15c.

The Commerce Commission has prepared a draft recommendation on the issue which it will make final before passing it on to Communications and Information Technology Minister Stephen Joyce, who has the final say.

Vodafone spokesman Paul Brislen told the Herald yesterday that his company would need to recover the costs of any loss that could result from regulating termination fees.

"If we can't charge Telecom or 2degrees that price, we've got to charge somebody else," he said.

"The customers most affected will be those on prepay who don't make many calls."

Mr Brislen said that in the United States, low-profit customers who did not make many calls but who received a lot were now charged to receive calls..

This was something Vodafone would need to consider if termination rates were halved from 15c a minute to 7c as recommended.

Mr Brislen said the company may also consider imposing minimum monthly spending.

Telecom spokesman Ian Bonnar said termination fee regulation would probably result in "some sort of rebalancing of pricing".

It was possible this could be achieved by charging more for handsets, which are usually subsidised when people sign contracts. Any price rises were likely to be competitive.

The commission believes termination fee regulation will increase competition and therefore benefit comsumers with better prices and services.

Mr Joyce said yesterday he hoped to consider the commission's final recommendations early next year.

* Cost of talking to the other side

Termination rates are the fees networks charge when one network calls or sends a text message to another.

The Commerce Commission says the networks need to be regulated because the termination rates are "significantly above cost" in New Zealand, at 15c per minute for phonecalls and 10c per text.

The commission wants rates to drop to 7.2c a minute for mobile calls and 0.95c a text message this year and then drop further to 3.8c per minute for calls and 0.5c per text by 2015.