New Zealand Watchdog Keeps Regulation View On Mobile Phone Charges

WELLINGTON -(Dow Jones)- Competition watchdog New Zealand Commerce Commission said Thursday it still wants mobile phone termination rates to be regulated, following a request by the country's government to reconsider its stance.

The commission said it has compared the benefits of regulation to offers made by Telecom Corp. of New Zealand Ltd., and the local unit of Vodafone Group Plc, to voluntarily reduce mobile termination rates.

"Regulation would bring greater benefits for end-users," the commission said in a statement.

In June, the 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 for completing calls on their networks.

The government publicly agreed with the commission that the charges are too high in New Zealand, but in August it asked the commission to reconsider its view after Telecom and Vodafone came forward with confidential proposals to voluntarily lower the charges.

However, the commission said that after revisiting the issue it has arrived at the same conclusion.

"The commission continues to believe that regulation will bring substantial benefits to businesses and consumers making fixed-to-mobile calls," said Douglas Webb, telecommunications commissioner.

The only change in the watchdog's previous view is that it now includes third-generation networks in its recommendation for regulation.

In June the commission excluded so-called 3G networks to "preserve the incentive for investment" in them.

Webb said there has been an "extensive rollout of 3G technology" since the commission's initial recommendation to the government.

"This suggests that the threat to investment in new technology from regulation is not as great as the commission first thought," he added.

The watchdog noted that it expects reductions in mobile termination rates to flow through into retail fixed-to-mobile prices paid by consumers, and said it will "monitor retail developments."

The initial price for mobile termination should be set by benchmarking against other comparable countries, the commission said.

Submissions can be made on the watchdog's view until Jan. 20, and it is expected to provide its final recommendation to the government in the first quarter to 2006.

Vodafone is New Zealand's largest mobile service operator by subscriber numbers, with around 54% market share. Telecom holds the balance.

-By Paula Oliver, Dow Jones Newswires; 64-4-471-5990; paula.oliver@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 22nd December 2005