KEY POINTS:
Telecom and Vodafone will be legally obliged to cut the cost of a call from a landline to a mobile over the next five years.
The Government has rejected a Commerce Commission recommendation to regulate mobile phone charges and has instead accepted offers from the phone companies to gradually lower them.
Economic Development Minister Trevor Mallard said the companies would be held to their offers by legally enforceable deeds.
There has been widespread criticism of the "mobile termination rates", said to be among the highest in the world, and in April last year the Commerce Commission recommended regulation.
The termination rate is part of the charge the caller pays for each minute they are on the phone.
Mr Mallard said Telecom had offered to reduce its mobile termination rate from 20 cents per minute (cpm) to 12 cpm, and Vodafone had offered to reduce its rate from 20 cpm to 14 cpm, both over the next five years.
An industry solution was a better way because it would promote competition, which would benefit users, he said.
Termination rates are the fees that mobile phone companies charge other carriers to terminate calls on their networks.
They have a significant influence on the costs of providing fixed-to-mobile services.
"Vodafone's and Telecom's commitments will promote competition in this market," Mr Mallard said.
"Competition, innovation and investment in the telecommunications sector bring better products and services to consumers."
- NZPA
