NZCC: Investigating Possible Changes To Mobile Regulation

WELLINGTON -(Dow Jones)- New Zealand's competition watchdog, the Commerce Commission, said Tuesday it will launch a full investigation into regulating the local mobile market after finding significant barriers to entry by new competitors.

The decision follows an initial study, which found New Zealanders are paying too much for mobile calls, and that New Zealand has low mobile usage compared with other Organisation for Economic Cooperation and Development countries.

"Existing competition does not appear to have increased mobile usage, and we haven't seen significant new entry into the mobile market," Telecommunications Commissioner Douglas Webb said in a statement.

"The Commission considers the current regulatory settings may not be creating sufficient incentives for that entry to occur," he said, adding: "The Commission will now investigate whether these issues can be addressed by some form of regulation."

New Zealand was unusual among OECD countries in having only two competing networks, according to Webb. Most countries have at least three networks, with some having four or more. More competition in New Zealand should bring lower prices and more innovative deals for customers, he said.

"In a competitive market, a scenario of low usage and high prices, along with high fixed and low variable costs, would be self correcting," Webb said. "The fact that this has not occurred suggests that there is room for enhancing competition through new entry."

Tuesday's decision to look at tightening regulation is bad news for incumbent mobile players Vodafone New Zealand with a 53% share of the market by subscriber numbers, and Telecom Corp. of New Zealand, which makes up the remainder.

It comes as Telecom, the country's biggest fixed-line operator, is facing the prospect of seeing its local loop copper wire monopoly broken in early 2007 as part of government plans to make the NZ$5.8 billion telecommunications market more competitive.

The Commerce Commission said that it will consider amending the current terms of the national roaming service - where rival networks send and receive calls on each others networks. It will also consider tightening regulation surrounding co-location services - where multiple telecommunications providers set up their equipment using the same network hub.

The watchdog has decided not to look into regulating wholesale access to capacity on mobile networks at this stage, however, opting instead to monitor commercial developments that are currently taking place.

No time frame was given for the investigation, with the Commission saying it will release more information on the timing and scope of the investigation soon.

-By Rachel Pannett, Dow Jones Newswires; 64-4-471-5990; rachel.pannett@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 10th October 2006