Grizzles heard loud and clear at telco summit

Mike Reynolds says 'excessive' termination costs are keeping New Zealand's mobile service retail prices high and usage low. Photo / Supplied

Grizzling and finger-pointing at competitors and regulators was not confined to the topic of fibre broadband infrastructure when industry leaders gathered at the annual Telecommunications & ICT summit in Auckland this week.

With a new player about to enter the mobile market, the costs of mobile phone calls in New Zealand relative to charges in other countries was another contentious subject under debate.

Speaking at the conference, Mike Reynolds, chief executive of 2degrees, the long-anticipated third mobile network operator which plans to launch its service to consumers next month, reignited his ongoing attack on the two existing mobile network providers, Telecom and Vodafone.

Reynolds said "hugely excessive" mobile termination rates - the costs telcos charged each other when a call crossed from one network to another - were the greatest challenge to competition in the local market.

He produced data compiled for the GSM Association, a global body of network operators, which he said showed high termination rates in New Zealand could be clearly linked to high retail prices for mobile services and low usage compared to other countries.

After Reynolds voiced similar concerns at another industry conference last month, Vodafone hit back, saying claims local termination rates were high by world standards were "erroneous and misleading".

Vodafone's general manager of corporate affairs, Tom Chignell, said at the time New Zealand's termination rates were lower than some of the most competitive countries in Europe for mobile access.

"Mobile termination rates are often held up to be some kind of silver bullet in lowering retail rates but they bear very little relation to the retail rates around the world as measured by the OECD," he said.

"Countries with high termination rates can have low retail rates, like Denmark and the Netherlands, and countries with low termination rates, like the US, can have some of the highest prices on record."

Chignell said New Zealand stands out in the OECD in that it has a legally binding "deed of undertaking" signed by both Telecom and Vodafone to ensure 100 per cent of any savings earned through reductions in termination rates are passed on directly to customers.

"In the first 21 months of our deed, customers saved $21 million and over the five-year period the deed is supposed to run that would equate to $90 million in savings.

"That's at risk if the Commerce Commission decides to regulate the industry."

The issue is currently under consideration by the Commerce Commission.