Pricing under microscope in bid to broaden mobile market

The Commerce Commission is to investigate whether it should set prices to allow other companies to access Vodafone and Telecom's mobile networks.

In May, the commission began investigating why there were only two mobile phone operators in New Zealand and barriers to entry of other operators into the market.

Yesterday it concluded its five-month review by deciding more investigations were necessary.

"There are features of the mobile market that suggest that competition in this market is limited," the commission said.

"While there is some dispute as to comparative pricing data, retail prices for mobile voice calls remain significantly above the midpoint of other OECD countries across all user types."

The commission will examine the possibility of setting prices for roaming services - which allow other mobile phone operators with limited networks to use one of the incumbents' network.

"In the absence of regulation, there may be insufficient incentive for existing mobile network operators to offer roaming services at a reasonable price to a potential entrant," the commission said.

The commission will then examine whether it should set prices for cellphone operators to put their own transmission equipment into competitors' phone towers - known as co-location.

"Co-location can reduce the cost associated with the setting up of cell sites and associated infrastructure for a mobile network by the sharing of facilities with other network operators.

"The inability to obtain a regulated co-location price may limit the effectiveness of the current regulated co-location service."

Only Telecom and British-owned Vodafone operate cellphone networks in New Zealand.

Telecom and Vodafone have argued that the mobile phone market was already very competitive and there was no need for further regulation.

The commission said it would not conduct an investigation into whether the cellphone operators should be made to provide wholesale services to other potential entrants - which would allow competitors to offer mobile phone services without their own network - known as an MVNO.

Allowing MVNOs could stop competitors from building their own network infrastructure, the commission said.

The commission said it would "monitor the commercial developments that are taking place around wholesale access and will wait to see if there is entry at the network level".