KEY POINTS:
Vodafone and Telecom are resisting Commerce Commission moves to control mobile termination charges - the wholesale charge to make calls between fixed line telephones to mobile phones.
The commission has set a February 5 deadline for submissions to its inquiry but the increasing tide of regulation on telcos has the industry on edge.
It is the commission's third attempt to regulate the mobile termination wholesale charge which makes up part of the price fixed line callers pay when they phone mobile numbers.
The commission and consumer bodies such as the Telecomm-unications Users Association of New Zealand (TUANZ) have argued it is high compared with other countries.
In 2005, the commission estimated telcos were charging 20c per minute, prompting the it to call for regulation. The telcos then agreed to reduce the termination charge.
With Government approvals, they established a voluntary scheme and dropped the 20c per minute charge to 17c in the first year to fall successively over five years. Under the voluntary deal, the price fell 1c each year to 11 to 12c per minute.
Then Telecommunications Minister David Cunliffe said at the time that the voluntary deal - which provided an instant cut in the price paid by consumers - recognised telcos' investment in the their mobile infrastructure. But the commission and TUANZ argue that it should be even lower than that.
The renewed push for tighter rules is seen as scepticism of the industry's ability to self-regulate.
And an industry leader - who would not be named - said it illustrated the tensions over regulation which included Telecom chief executive Paul Reynolds complaining late last year that rules were threatening the viability of the sector.
Late last year TUANZ said it was "utterly frustrated" at the time this issue has been around, the discord on this matter between the commission and the Government, and the consequent excessive cost passed onto business and residential users over many years.
Termination charges flow directly into the price of calls to mobiles from both fixed and mobile phones.
"This mounts up to a huge cost to users in the course of a year, especially business users who make many calls every day," said TUANZ chief executive Ernie Newman.
Last week, Vodafone explained its opposition to regulation. It rejected the commission's comparison, saying that the termination charge was comparatively low.
Vodafone and Telecom argue that the voluntary agreement and its undertakings are guaranteed to be passed onto consumers and that has contributed to a fall in the charges to retail customers. Formal regulation would be limited to the wholesale sector and there would be no guarantee that it would be "passed through" to consumers.
While the terms of potential regulation are unclear, any deal in which the telco did not pass on savings would benefit Telecom because it is so dominant in the fixed line business.
