NZ regulator to control mobile costs

October 18, 2004

New Zealand's Commerce Commission says mobile phone operators have abused their dominant position in the market and recommended regulating mobile phone termination costs.

Termination charges apply to terminating calls from landlines to mobile networks. A draft report published by the commission reflects its 'preliminary view' on whether or not to recommend regulation of mobile termination rates.

The commission's network access group manager, Osmond Borthwick, said that limited competition has resulted in termination rates 'significantly above cost'.

"Based on the information currently before it, the commission considers that a regulated reduction in mobile termination rates is likely to lead to increased competition in the market for tolls and fixed-to-mobile calls," Mr Borthwick said.

But it has excluded 3G networks which are currently being rolled out in the country, as it could hurt investment in the new technology.

"The Commission is reluctant however to regulate the returns from new technology and at this stage does not propose to regulate 3G mobile services," added Mr Borthwick.

The commission commenced its investigation into mobile termination in May this year after considering complaints that a potential lack of competition may be resulting in unreasonably high charges for fixed-to-mobile calls.

The commission said it expects to hold a conference in late November before sending its final recommendations to the Minister of Communications in early 2005.