23 Feb 2010

Mobile ruling bad for consumers, say advocacy groups

6:07 am on 23 February 2010

Consumer advocacy groups say the public will keep paying a premium for mobile phone use if the Government chooses to let Telecom and Vodafone regulate their own cross-network call charges.

The Commerce Commission recommended in a 2-1 decision on Monday that the networks be allowed to implement their own programmes to reduce charges over five years, rather than be regulated by Government.

Consumer New Zealand and the Telecommunications Users Association (TUANZ) say the reductions aren't sufficient and the the Government should regulate the industry.

TUANZ chief executive Ernie Newman says Vodafone and Telecom are charging much more for receiving calls and texts into their networks than the actual cost.

He says this distorting competition and keeps traffic in the duopoly, making it hard to get a competitive market.

Termination prices are the wholesale fees mobile phone companies charge for switching phone calls between networks. Telecom and Vodafone plan to reduce mobile termination rates by 60% by 2014.

Under the deal, the companies will drop mobile termination rates from approximately 15 cents to 6 cents per second. For texts, prices will drop from 9.5 cents to zero.