Mobile fees report months away

A final Commerce Commission report on whether to regulate charges in the mobile phone market is two to three months away.

The commission last week staged a three-day conference at which telcos and other interested groups put arguments for and against market regulation.

Telecommunications User Group (Tuanz) head Ernie Newman told the conference the issue at stake was one of fair prices for New Zealand cellphone users, "who, according to the OECD, are paying the developed world's highest prices for mobile phone services".

The conference followed a draft report last October in which the commission said that mobile termination charges - the fees mobile phone companies charge other carriers to terminate calls on their networks - were too high.

Telcos, supported by the Business Roundtable, took the predictable view that regulation was not justified. The Business Roundtable, which submitted that the mobile market was one of the telecomms sector's most competitive, said regulation could have "unintended consequences".

The operators of New Zealand's two mobile phone networks, Telecom and Vodafone, questioned the commission's grounds for wanting to regulate termination charges.

According to Vodafone, the commission's recommendation is "the most intrusive regulatory intervention into the business conduct of Vodafone" ever proposed in New Zealand.

"In fact, the one-off cut proposed, of around 40 per cent, is the most severe intervention in any of the 26 markets in which Vodafone operates."

Telecom called the commission's proposal "out of step" with market reality. It said if termination charges were cut it would have to increase the cost of handsets.

Both Telecom and Vodafone are making solid profits from mobile services, Telecom calling its mobile business a "star performer" when it released second-quarter results in February.

Vodafone reportedly made a $154 million profit in New Zealand in the September 2004 year - 71 per cent up on the year before.

A notable feature of the conference was the reappearance of Econet Wireless New Zealand, which has been promising since 2001 that it will build a mobile network based on the same technology as Vodafone.

But little has since been heard from the firm, a subsidiary of a Zimbabwean company.

Econet Wireless New Zealand spokesman Tex Edwards would not comment yesterday on its plans in this country other than to say "we're back in business".

"I'm not going to explain x, y, z in 10 minutes. It's all highly contextual and I don't want to get caught out talking out of context."