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NZ mobile phone regulation increases competition, cuts cross-network pricing

Wednesday 18th July 2012

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New Zealand consumers are enjoying the benefits of a more competitive mobile phone market with cheaper cross-network calls and text messaging since the Commerce Commission forced carriers to cut the rates they charge each other for ending calls on rival networks.

Cross-network traffic on mobile phones increased between February and April this year, and the discount for on-network calls has narrowed, the regulator said in its latest report on the market.

The volume of calls between networks rose 1.4 percent in the period and is up 5.3 percent since May last year when the commission forced carriers to cut mobile termination rates, while text messaging rose 1.6 percent in the quarter, and is up almost 11 percent since the regulator acted.

The discount for making a call to a mobile on the same network has dropped to 35 percent from 48 percent in May last year. Off-net revenue per minute fell to 34 cents at the end of April from 41 cents in May 2011, while on-net revenue increased to 22 cents from 21 cents.

"It's pleasing to see a reduction in the price difference between calling people on the same network and those on other networks," Telecommunications Commissioner Stephen Gale said in a statement. "This suggests that competition between mobile operators is continuing to increase."

Last year the commission decided to force mobile phone companies to cut their mobile termination rates to 3.56 cents a minute by April 2014 amid complaints the wholesale cost was a barrier to entry for rival networks and meant New Zealanders make fewer calls at a bigger cost.

Government figures yesterday showed falling prices for communication equipment and services was the biggest contributor to the slowest annual pace of inflation for 13 years, with Statistics New Zealand putting it down to better broadband plans, better value for mobile services, and cheaper phones. The price of telecommunication services sank 9.1 percent and equipment prices plunged 28 percent in the year ended June 30.

The regulator has pushed out a comprehensive report on progress in the mobile market due to the entrance of Telecom's Skinny Mobile into the market and the potential acquisition of TelstraClear by Vodafone New Zealand.

"The commission will therefore continue to monitor the mobile market to assess the impact of these changes," Gale said.

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