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Home / Business

Telcos brace for Commerce Commission's mobile market verdict - and possible new regulation

Chris Keall
By Chris Keall
Technology Editor/Senior Business Writer·NZ Herald·
15 May, 2019 07:09 AM3 mins to read

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Photo / 123rf

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The telecommunications industry has barely had time to digest news of Vodafone NZ's sale, but another shake-up could be in the works as the Commerce Commission releases a key report today.

LATEST:
• 'Disgraceful. They've missed the mark massively' - telco on ComCom report

The watchdog will deliver the preliminary findings of its study into mobile market competition, which has been nearly 18 months in the making.

Previous studies have proved the precursors to major regulatory changes designed to boost competition - including a decision to slash the fees telcos can charge each other when calls cross between their networks, and portability - or the ability to take your phone number with you when you switch to a rival network.

Both moves provided a major leg-up for 2degrees.

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The latest study looks at the mobile market overall.

Marko Bogoievski, chief executive of Vodafone NZ buyer Infratil, earlier this week told analysts he hoped the ComCom would recommend shared infrastructure to speed a 5G rollout (a change from Vodafone - and Spark and 2degrees' - historic stance, at least outside of the public-private Rural Broadband Initiative).

And the industry pricked up its ears in August 2017 when then Communications Minister Simon Bridges wrote to then Telecommunications Minister Stephen Gale, highlighting the potential of MVNO (mobile virtual network operator agreements) to increase competition.

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"In other countries, these services are an important part of the mobile ecosystem, and the widespread availability of such services has led to better outcomes for consumers," Bridges wrote.

READ MORE:
• Vodafone NZ gains in mobile, falls in broadband

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An MVNO agreement is a wholesale deal. Examples include The Warehouse Group's Warehouse Mobile, which is a re-badged version of 2degrees' mobile service, and Vocus' mobile services for its Orcon and Slingshot customers - which are based on an MVNO deal with Spark.

Market researcher IDC has pointed out that MVNO players account for less than 1 per cent of the mobile market here, but play a major role in a number of other countries - notably the UK.

As the ComCom's investigations continued, Vocus boss Mark Callander made it clear he thought today's MVNO deals were too restrictive.

Callander said he's not looking for a free lunch, but does want a "cost-plus" model or another mechanism that will give companies like Vocus more freedom about the types of mobile plans they can offer, and at what price.

He wants mobile and landline/mobile bundles to become a major part of his company's business, but under today's rules it's simply not worth marketing them, he said.

Earlier, Spark managing director Simon Moutter said the mobile market had become highly competitive and that the ComCom would better serve consumers by deploying resources elsewhere.

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Moutter's argument was bolstered to a degree by the ComCom's own Annual Telecommunications Monitoring report, released in December, which noted that, overall, Kiwis are now getting more mobile services for their money.

Source / Commerce Commission Telecommunications Monitoring Report, Dec 2018.
Source / Commerce Commission Telecommunications Monitoring Report, Dec 2018.

The regulator reported that New Zealanders are now paying well below the OECD average across the board - though Australian heavy mobile users get a better deal.

The December findings probably mean the ComCom won't recommend any big-bang measures to Communications Minister Kris Faafoi.

But on the MVNO front, Spark, Vodafone and 2degrees will still be nervous.

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