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Vodafone faces the prospect of regulation after the Commerce Commission knocked back its offer to allow competitors access to its cell phone sites.
The commission yesterday recommended the Government reject an undertaking from Vodafone to provide access - co-location - to its cell sites in favour of regulation.
Under a co-location agreement, a competitor can pay to place its equipment on the same tower or site as an existing operator.
In reaching its decision the commission said despite commercial co-location agreements being in force for a number of years, less than 0.5 per cent of cell towers had been opened up.
It said price wasn't a barrier to co-location, rather that incumbent operators - Vodafone and Telecom - had zealously guarded key co-location sites and had little or no incentive to offer co-location to competitors.
The undertaking offered by Vodafone was unlikely to promote any new mobile players entering the market, the commission said.
"Although a co-location code has been agreed to by the telecommunications industry, it has yet to result in any co-location," said Telecommunications Commissioner Ross Patterson. "By launching a standard terms process, the commission will be able to develop more effective co-location arrangements as we have recently done in relation to unbundled local loop services."
Bill Osborne, chairman of aspiring third mobile operator NZ Communications, said the outcome of the investigation by the Commerce Commission was "another small but important stepping stone to creating more mobile phone network competition in New Zealand".
"The Commerce Commission's recommendation makes breaking into a market at 100 per cent penetration a little less of a difficult challenge," said Osborne. "It will benefit new entrants by facilitating access to difficult coverage areas and where obtaining Resource Management Act approval would create lengthy delays."
Vodafone corporate affairs manager Tom Chignell welcomed the news the commission would be using the well-established determination process for setting the terms and conditions for co-location as it had done in the broadband market.
"We are sure that if standard terms determinations had been available when co-location was first considered by the industry and the commission then it would have been adopted as the process," said Chignell.
The Commerce Commission first began investigating the absence of new entrants into the mobile market in 2006, prior to the introduction of the Telecommunications Amendment Act later that year.
Telecom spokesperson Mark Watts said the company also looked forward to participating in the standardterms process and thoroughly discussing the many issues around co-location.
