TelstraClear cuts mobile call rates

Friday 6th May 2011

TelstraClear is cutting its residential mobile to mobile call rate by a third to 19 cents a minute for new and existing customers after the Commerce Commission yesterday moved to cut mobile termination costs.

The commission said yesterday that it expected lower charges for mobile phone calls and text messages after deciding "significant" cuts should be made in the costs charged by a mobile network operator for providing services to customers from other network operators.

It said that termination rates for calls will drop to less than 4c by next April, with further reductions until 2014. Termination rates for text messages will drop to 0.06c from today.

In its decision, the commission said prevailing mobile termination rates in this country were as high as 17.22c a minute for voice termination, with the charge for text 9.5c. Those were significantly above its estimate of forward-looking cost-based rates.

TelstraClear said it was providing the benefits of the new pricing issued by the commission even before it received the benefit of lower costs itself.

TelstraClear chief executive Allan Freeth said his company and its predecessors had been fighting against monopolistic rorts in the New Zealand telecommunications market for more than 20 years.

"I have framed on my wall a copy of the first phone bill that wasn't a Telecom one. It's a reminder of the long and fraught battle to bring down a monopoly and give New Zealanders choice and fair prices. Yesterday's decision by the Commerce Commission shows that the war isn't over. TelstraClear is committed to continue fighting."

Freeth said the commission needed to be involved as a referee in the Government's planned ultra-fast broadband roll-out.

"We are running a TV ad campaign to help raise awareness of the immense problems the Telecommunications Amendment Bill will cause, including restricting consumer choice and raising prices," he said.

Telecommunications Commissioner Ross Patterson said the changes were intended to address significant competition problems in the wholesale mobile market.

Those problems had resulted in high retail prices, particularly for prepay customers, as well as a low number of mobile calls, and high rates of people switching networks, compared to other countries.

The commission was concerned about the extent to which the price of calls and text messages between people on different networks were significantly higher than calls and text messages between people on the same network, Patterson said.

"These price differences create significant barriers for the new entry and growth of small mobile operators in the mobile market."

Vodafone said the commission had taken arbitrary benchmark rates which were far below cost. The 4c a minute voice rate looked extreme compared to termination rates of 10c in Australia at 11c in Europe.

It was half the rate indicated by an estimate of cost in this country which had been provided to the commission, while the cost for text, which was unregulated in most countries, had been set at a cost which was around a third of Vodafone's best estimate of cost.

NZPA

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