NZ mobile calls among most expensive in world

1.00pm

Talk may be cheap - but not if you're in New Zealand where cellphone users are paying some of the highest charges in the world.

The tariffs have come under fire this week, with New Zealand First leader Winston Peters using question time in Parliament to demand to know why New Zealand cellphone users are paying twice as much as those in Australia.

His claims are backed up by a damning draft report released this week by the Commerce Commission which recommended regulating the industry, saying some charges were "significantly above cost".

New Zealand ranked 29th out of 30 countries, with prices that were 62 per cent above the average for medium and high users of mobiles.

A Herald on Sunday survey comparing the cost of a peak-hour five-minute call from a prepaid cellphone to a landline in eight countries found charges here were by far the most expensive.

In New Zealand Telecom and Vodafone both charged $6.95 for the call while in Australia the cost of a five-minute call with Telstra was just $2.25.

In the United Kingdom the cost of a five-minute call was $2.60 with Orange, while in the United States you could make the call with Verizon Wireless for $1.06. Bell in Canada charged $1.75.

Singapore was by far the cheapest with the five-minute call costing 65 cents with MobileOne. In Ireland, Vodafone charged $4.10 for a five-minute call, slightly higher than in South Africa where the same call cost $3.30.

The results have come as no surprise to Mr Peters.

"It's price gouging of the worst sort. It's a massive cost on the ordinary business and cellphone consumer and they've got away with it for years ... we are being ripped off."

David Russell, chief executive of the Consumers' Institute said cellphone users were suffering because New Zealand's mobile market was a duopoly.

"While there was competition when Vodafone first entered New Zealand it has settled down now and both companies know they can make a tidy profit. There is no incentive to lower prices."

Communications Minister Paul Swain agreed mobile phone prices in New Zealand were too high.

However, Vodafone finance director David Sullivan said he believed New Zealand's mobile phone charges were reasonable.

It was impossible to compare New Zealand with countries such as Singapore, which had small land areas and therefore low network establishment costs.

Telecom spokesman John Goulter said current prices reflected the economics of providing a mobile service in New Zealand.

"We have the population of Sydney spread across a large area with lots of mountains. Each cell tower costs us $500,000." He said mobile phone call costs had decreased 30 per cent over the past five years.

- HERALD ON SUNDAY