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The Commerce Commission is mulling over an agreement with Vodafone that could facilitate the entry of a new mobile player here.
Vodafone has given the commission details of a commercial undertaking to allow competitors to use its network to establish national coverage - important for any new entrant
to the high-cost mobile market.
The undertaking process runs in tandem with the commission's review of the sector.
It will make a recommendation to Communications Minister David Cunliffe before the end of the year to either accept Vodafone's undertaking or introduce further sector regulation.
At the start of the month, the commission asked Vodafone to rethink some of its original undertakings, in particular price setting.
It raised the issue last year because it was concerned by the ability of the incumbent to apply anti-competitive "pocket pricing" - selectively pricing particular geographic areas or customer segments - to the detriment of a potential new entrant.
Vodafone commercial development general manager Tom Chignell said the commission indicated pricing should be cost based, an approach the company did not necessarily agree with.
"If we are going to make it cost based then that's OK, but the costs on our network are dramatically different between the various parts of the network."
Chignell said the part of the network where it was expensive for Vodafone to provide service, such as sparsely populated rural areas, the costs should be passed on to the new entrant.
Vodafone has proposed prices for network roaming be worked out by averaging the costs of the areas not covered by the new player's own network.
These are based on a headline rate of 15c - the mobile termination rate recently agreed with the Government plus a 1c for set-up cost recovery.
"If they were to chose to build in all the rural areas and not the metropolitan areas, then the price would actually be lower than 14 [cents]. If they chose to build in all the metropolitan areas and not the rural areas, the price would be higher than 14c," said Chignell.
Offering a low fixed rate across the network could see the new player "picking off" the cheaper-to-build metropolitan networks.
"One of the objectives of the regulation is to encourage infrastructure investment."
For a call from a roaming mobile customer to another roaming customer, the charges will apply to each "leg" of the call, doubling the cost.
In its feedback in March on Vodafone's draft undertaking, likely access-seeker NZ Communications said the indicated wholesale pricing mark-ups were "usurious" when compared with existing retail prices
"The wholesale price at which the roaming service is made available should not impair our ability to compete at the retail level," it said.
"We would, therefore, expect pricing to be more reflective of international benchmarks."
In its amended undertaking, Vodafone has backed away from insisting its telco customers use only Vodafone's roaming services and a requirement for approval before wholesaling the service.
However, it has stood firm on not being forced to immediately open up its 3G network and the right to recoup set-up costs.
It said the first national roaming agreement with TelstraClear in 2005 cost it $5 million in development costs.
Investigating national roaming and co-location agreements is part of a wider Government revamp of the telecommunications sector aimed at introducing further competition and reducing prices paid by consumers.
Last year, a Government report said New Zealand was unique among its OECD peers in having only two competing mobile networks - Vodafone's GSM network and Telecom's CDMA network.
With TelstraClear dumping plans for a mobile network last month, the most likely entrant is NZ Communications, formerly Econet Wireless, which has $100 million in funding.
