Cheaper mobile calls and texts expected

Thursday 5th May 2011

Lower costs for mobile phone calls and text messages are expected after the Commerce Commission decided that "significant" reductions should be made in wholesale termination rates.

The commission's decision, released today, deals with the issue of the cost of carrying a text or call on a different network from that of a mobile customer.

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."

While the commission expected reduction in wholesale termination rates for calls and text messages to resolve the problem, it would be monitoring this situation closely, including publishing monthly reports, and was prepared to move quickly to limit those price differences if needed, Patterson said.

The graduated reduction in termination rates for calls would allow mobile providers time to adjust retail rates. In providing the graduated reduction, or glide path, the commission had sought to balance the benefits for consumers in terms of lower prices, while allowing mobile providers time to adjust retail prices.

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 tomorrow.

NZPA

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