New Zealand Government Asks Watchdog To Reconsider Mobile Fee Rules

WELLINGTON -(Dow Jones)- The New Zealand government Tuesday said it has asked the Commerce Commission to reconsider its recommendation on mobile phone termination charges.

In June, the Commerce Commission recommended to the government that price controls be implemented on fixed-line to mobile phone termination fees. Fixed-line to mobile phone termination fees are charged by mobile companies to fixed-line operators such as Telecom (TEL.NZ) for completing calls on their networks.

Communications Minister David Cunliffe said he agreed that mobile termination charges are too high in New Zealand, but asked the Commerce Commission to reconsider three issues.

Cunliffe said the commission should consider whether a regulated or commercial solution is the best way forward. A commercial solution would see a voluntary agreement between the two biggest mobile phone service providers, Telecom Corp. of New Zealand (NZT) and Vodafone Group PLC. (VOD.LN), to reduce termination charges.

Cunliffe said he has asked the commission to consider issues relating to the split between second generation and third generation services and how price reductions would work for voice and data products.

The commission's June recommendation exempted 3G services from price regulation.

"Second I would like the commission to consider two commercial offers put to me by Telecom and Vodafone," he said. "These include an early start to rate reductions, a blended 2G-3G rate and an undertaking by Telecom to pass through 100% of reductions to its fixed to mobile callers," Cunliffe said.

Cunliffe also said the government wants the commission to review ways of ensuring that consumers benefit from reductions in wholesale mobile termination rates.

Vodafone has previously noted that the current regulations fail to guarantee price reductions to consumers because Telecom, as the biggest fixed-line phone carrier, can elect to keep the savings it makes from being charged less by mobile operators.

Cunliffe said the government hopes to hear back from the commission by the end of this year.

He said regardless of the final solution proposed by the commission, consumers will stand to benefit through lower mobile prices.

Cunliffe said that a commercial solution between Telecom and Vodafone, if accepted by the commission and recommended as the best outcome, could come into effect early in 2006.

However, a regulated solution will take between 12 months to 18 months to implement, he said.

"I am determined to see mobile termination rates reduced in a manner that is workable and that benefits end users," Cunliffe said.

-By Shri Navaratnam, Dow Jones Newswires; 64-4-471-5990; shri.navaratnam@dowjones.com

-Edited by Alan Soughley

(END) Dow Jones Newswires"

Posted to the site on 9th August 2005