June 14, 2008

‘Inflated’ Mobile Fees Come in for Scrutiny


IF THE Commerce Commission decides to regulate mobile termination charges, it will be effectively regulating retail prices by stealth, according to Vodafone chief executive Russell Stanners.

Popular voice and text plans such as Telecom's $10TXT and Vodafone's BestMates, which are designed for customers to stay on each company's own mobile networks, would be undermined by an enforced drop in termination fees, and their prices would probably rise as a result, Mr Stanners said.

The move is seen as significant because regulation would make it harder for Telecom and Vodafone to offer their customers discounted prices that only apply when customers call or text other customers on the same network.

Last week, telecommunications commissioner Ross Patterson wrote to Vodafone, Telecom and other telecommunications companies advising them he was considering taking a closer look at the mobile-to- mobile termination rates for voice and text.

Termination fees are charges that Vodafone and Telecom charge their competitor's mobile customers for calling or texting their own customers. They would also apply these fees to customers of any other company entering the market.

The commission believes the charges are greatly inflated.

It estimates Vodafone could charge 1.1 cents to direct a text message from the Telecom network to one its customers, compared with the current charge of 9.5c.

The commission's last estimate was that the average cost of terminating a mobile call was 9.5c a minute. The Dominion Post understands both companies charge 16c a minute.

Landline-phone-to-mobile-phone termination rates are being reduced in stages as part of an agreement between the Government and the two mobile companies last year.

One commentator believes the commission's move results from its concerns that a new entrant to the mobile market could be disadvantaged, or even excluded, by the high termination rates.

Telecommunications users advocacy group Tuanz said it would welcome a commission investigation into mobile-to- mobile termination fees.

Its chief executive, Ernie Newman, said: "On the face of it there is evidence the status quo is a significant barrier (to companies entering the mobile market) and that alone is reason for the commission to investigate."

NZ Communications, formerly Econet Wireless, is building a third mobile network beginning in the three main urban centres of Auckland, Wellington and Christchurch.

Last year it signed a national roaming agreement with Vodafone enabling future customers to get coverage in areas its mobile network does not reach.

NZ Communications chairman Bill Osborne was unavailable for comment.

Telecom said it would be premature to comment on the commission's letter and would not reveal its termination rate.

The commission is seeking views from telecommunications companies whether it should proceed with an investigation.


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