More submissions on mobile phone regulation decision

Communications Minister David Cunliffe has allowed three more weeks for submissions before deciding whether to regulate mobile phone termination rates.

Mr Cunliffe today released a Commerce Commission report recommending regulating voice calls from fixed home or business phone line to all mobile networks.

There would be no repeat on the consultation process undertaken by the commission, but submissions could be made on any new matters raised in the report until May 22.

Telecom and Vodafone delayed a decision on regulation last year by offering to voluntarily cut the cost of mobile phone calls.

The commission's report today still recommended regulation, Mr Cunliffe said.

"I do not expect to make any further public comment on this issue until I have made my decision on the commission's recommendation," Mr Cunliffe said.

In June last year, the Commerce Commission determined that mobile termination rates were too high and recommended the Government regulate to lower the price.

The average rate is 27c a minute but the commission wants rates reduced to about 15c to bring New Zealand in line with other OECD countries.

The Government's moves to regulate were put on hold in August after Vodafone and Telecom offered to voluntarily reduce termination rates.

Telecom cut its previous rate of 26c a minute by 2c in August as part of a plan to lower rates to 18c a minute by 2009.

Vodafone also publicly outlined a four-year price cut plan to 18.5c by 2010.

The commission began its investigation into mobile termination in May 2004 after complaints that a potential lack of competition in the wholesale market for terminating mobile calls could be resulting in unreasonably high retail charges for fixed-to-mobile calls.

The 112-page report -- plus thousands of pages of memos and background material -- said regulation would still produce a net benefit of up to $63 million, even taking into account the price cut offers from the companies.

There was currently limited competition and the service was "significantly above cost".

"Regulation of mobile termination rates will promote competition in this market through an improved alignment of price and costs," the report said.

The commission has also changed its stance on regulation for different technologies.

Initially it recommended not regulating the newer 3G technology.

The final recommendation to the minister said the commission had considered regulating 3G would slow down its development, but it no longer believed that would be the case.


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