23 Dec 2010

Regulator recommends cheaper mobile calls

5:08 pm on 23 December 2010

The cost of switching phone calls and texts between mobile networks should drop sharply from April, says the Commerce Commission.

In a draft decision, the regulator says the cost of mobile termination rates should be cut from 17 cents a minute to 4.7 cents a minute.

The price would drop to 3.9 cents by April 2014.

For texts, the commission is recommending what is known as a "bill-and-keep model", under which phone companies do not charge each other for routing messages, partly because the cost is already low.

The commission says lower rates will promote competition, particularly for new entrants such as 2degrees, which in turn will benefit consumers.

The Government supported the commission's call for regulation in August.

Telecom and Vodafone opposed the move, preferring a voluntary approach to cut rates gradually over a number of years.

Vodafone says overseas evidence shows there is no guarantee lower mobile termination rates are passed on to consumers.

The companies will get a chance to comment on the commission's recommendations before a final decision is released in March.

Telecommunications Users Association spokesperson Katherine Hall says it is important the savings are passed on to consumers.