It has been three years since we have heard the sort of fighting talk now coming from the telecommunications industry. In 2006, it was Telecom warning of dire consequences if the previous Government opened its network to competitors. Its bluff was called, much to the benefit of consumers and the
economy. Now, it is Telecom and Vodafone, the big two in the mobile phone market, which are predicting costly repercussions for consumers if the termination charge that rivals pay to gain access to their networks is regulated. Their bluff, too, should be called, and soon.
A Commerce Commission draft report has already indicated that the price charged by Telecom and Vodafone is "significantly above cost", even though it has already dropped from 20c a minute to 15c. This analysis is backed by international comparison and by economists, who point, especially, to the difficulty this exorbitance raises for new entrants seeking a foothold in the market. Not surprisingly, new mobile phone network 2degrees is one of the partners in a campaign seeking regulation of the rate.
Telecom and Vodafone claim such a move by the Government would result in phone users facing charges for receiving calls, minimum monthly spending caps and higher handset prices. This is scaremongering. Reducing the rate to 7.2c a minute for mobile calls by the end of the year, as sought by the commission, would, in fact, inspire increased competition and a better deal for consumers.
Communications Minister Steven Joyce needs to see through the two companies' threats, and not allow himself to be swayed by murmurings for a return to light-handed regulation. Mobile call charges have been too high for far too long. Mr Joyce, unfortunately, seems content to wait for the commission's final recommendation early next year. He has enough evidence and knowledge of past practice in the industry to act now.
