New Zealand Watchdog: Recommends Regulation Of Mobile Termination

WELLINGTON -(Dow Jones)- The New Zealand Commerce Commission Thursday in a final ruling upheld a preliminary decision to regulate mobile phone termination charges.

Telecommunications Commissioner Douglas Webb said the commission considers that limited competition in the market for mobile termination has resulted in mobile network operators setting mobile termination rates for fixed-to-mobile calls significantly above the level required to cover costs.

The commission said the estimated cost of mobile phone termination - fees that fixed-line network operators charge mobile telephone companies for completing calls on their lines and vice versa - is around 15 New Zealand cents a minute compared with 27 cents/minute currently being charged.

"The commission considers that a regulated reduction in the price of terminating fixed line calls on a cellular network is likely to lead to increased competition and lower prices for fixed-to-mobile calls," Webb said in a statement.

"The commission believes there will be substantial benefits to consumers and business from regulating mobile termination rates, despite the likely upward pressure on the price of mobile phone services that may result from the regulation," he said.

The commission's recommendation for price controls excludes voice calls using third generation mobile phone technology.

At the time of the commission's preliminary ruling in October last year, analysts said the recommendation wasn't a surprise given concerns that the two big players in the New Zealand market were resorting to oligopolistic pricing.

Vodafone Group PLC (VOD.LN), the world's biggest mobile service provider, leads the local market with a share of just over 55%, and Telecom Corp. (NZT), New Zealand's dominant phone concern, holds the balance.

Webb said that Telecom's Code Division Multiple Access network doesn't use 3G technology, and therefore will be subject to price controls along with calls terminating on Vodafone's GSM network.

Webb said that while the recommendations relate only to fixed-to-mobile phone calls, the commission considers the overall price levels of mobile services in New Zealand was high compared to the countries in the Organization for Economic Cooperation and Development.

"A comparison of New Zealand prices with those in other OECD countries shows that New Zealand is one of the most expensive countries in the OECD for users of mobile phones, and that the comparison becomes even less favorable as usage levels increase," he said.

The commission's recommendation to the minister of communications will be reviewed by the government before a decision on whether to regulate termination charges is announced.

-By Shri Navaratnam, Dow Jones Newswires; 64-4-471-5990;

shri.navaratnam@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 9th June 2005