Telcos hold phone prices despite cuts

Photo / Thinkstock

The country's two biggest telcos have not dropped their prices for calls from landlines to mobile phones despite making savings when wholesale charges were cut last month.

In May, the Commerce Commission slashed mobile termination rates in half, from 14c to around 7c per minute.

Termination rates (MTRs) are the fees telecommunication companies charge one another for a call or text message originating from a rival network.

It also applies when a call is made from a fixed-line to a mobile phone.

But although the fees were culled, Telecom and Vodafone have not lowered their mobile-to-mobile call prices nor their fixed-line to mobile prices.

Vodafone has argued there is no relationship between MTRs and the price of calls from one mobile to another.

But while conceding the mobile space was more complex, Telecommunications Users Association chief executive Paul Brislen said there was a direct link between MTRs and landline charges and the pair are simply not passing on savings they have made.

"It was 14c a minute [before the cuts] to call from a landline to a mobile. This month it's 7c a minute next year it will be 4c a minute. There are rapidly declining costs and yet no sign of passing any of it on to customers," he said.

Vodafone's former public policy manager, Hayden Glass, argued before he left the company that fixed-line providers would benefit from the rate cuts.

Despite this, Vodafone would give no comment on whether fixed-to-mobile charges would be lowered any time soon.

Telecom argued it had already reduced prices before the cuts and spokesperson Mark Watts said in some packages customers paid "next to nothing" for calls.

IDC analyst Rosalie Nelson believed Telecom's costs would have fallen following the commission's move, although she was uncertain by how much.

The company's standard charges of 49c for a call to a Telecom mobile and 55c to other networks are still up to 19c more expensive than Vodafone's price of 36c a minute.

While the country's two biggest telcos are not budging, others are lowering prices.

Woosh has reduced its charges by 7c.

CallPlus chief executive Mark Callander said the company would have cheaper fixed-line to mobile prices locked in by the end of the month.

"There's been a direct cost reduction, which should ultimately benefit consumers," Callander said.

CallPlus' standard rate for a fixed-to-mobile call will drop from 39c to 26c a minute, Callander said.

Despite the bigger players seeming unwilling to move, Communications Minister Steven Joyce said he was confident prices would come down,

"Over time, competition will see fixed and mobile operators pass through wholesale savings generated by regulated rates for mobile termination to their customers," he said.

Labour's communications spokesperson Clare Curran said she believed more intervention was needed.

"My view is that they should be shifting their prices but they won't until they're forced to," she said.