Calls to mobiles should cost less, says Commission

The Commerce Commission's telecommunications commissioner Douglas Webb. Herald file picture

The price of phonecalls to mobiles from landlines could fall after a Commerce Commission report.

The Commission has recommended to Communications Minister David Cunliffe that pricing for the calls be regulated.

Telecommunications Commissioner Douglas Webb said it considered that limited competition in the mobile market had resulted in companies setting prices "significantly above the level required to cover costs, including a reasonable return on capital.

"We have estimated the cost of mobile termination to be around 15 cents a minute, in comparison with around 27 cents a minute which is currently being charged. There is an obvious and significant impact on prices charged to users calling mobiles from a landline...

"The commission considers that a regulated reduction in the price of terminating fixed line calls on a cellular network is likely to lead to increased competition and lower prices for fixed-to-mobile calls," Mr Webb said.

The commission specifically excluded from its recommendation voice calls using third generation (3G) mobile technology. The commission ruled that Telecom's 027 network did not use 3G technology and therefore would be regulated along with Vodafone's GSM network.

Though the commission's recommendations related only to fixed-to-mobile calls, it said it had considered the overall price levels of mobile services and that New Zealand mobile prices were high compared to other OECD countries.

He said New Zealand was one of the most expensive countries in the OECD for mobile phone users and that the comparison was even less favourable as usage levels increase.

Mr Webb said the commission believed there would be substantial benefits to consumers and business from regulating mobile rates, despite the likely upward pressure on the price of mobile phone services that may result from the regulation.

The commission began its investigation into mobile prices in May last year after considering complaints that a potential lack of competition could result in unreasonably high retail charges for fixed-line-to-mobile calls.

Telecom and Vodafone said they were considering the report and would comment later.

- NZPA