Putative third mobile operator NZ Communications desperately wants the Commerce Commission to push ahead with an investigation into charges for calls, and texts, that cross between networks. But today the commission revised its timetable, slowing the pace.

In November last year, the commission gave notice to telcos that it was initiating an investigation (its third in the past five years) into mobile termination access services, or the money that telephone companies charge each other when calls, or texts, cross between their mobile networks, or between one carrier’s mobile network and another’s landline network.

No NZ Comms launch without progress
NBR understands the review is so central to NZ Comms’ fortunes that, although it has built much of its infrastructure, and hired around 220 staff, our wannabe third mobile operator can’t launch on a commercially viable basis until it has secured better termination deals Telecom and Vodafone.

So for NZ Comms, today’s news is all bad.

In a letter emailed to all telcos this morning, Anita Mazzoleni, one of three members of the Telecommunications Panel (alongside the recently re-instated Paula Rebstock), announced a two week delay before the next step in the investigation, in which telcos make undertakings to the commission.

A flow-on effect through the multi-stage investigation means the commission’s final report to the minister, previously due to be delivered in November, will now appear on an as yet unscheduled date in “late December”.

In a statement, NZ Comms chairman Bill Osborne notes that the commission was originally scheduled to deliver its final report to the minister in "late August".

The Commission is now further away from reaching conclusion on the matter than it was at the end of last year,” says Mr Osborne.

“We’re very disappointed. The evidence that excessive mobile termination rates are anti-competitive is overwhelming and they represent a significant barrier to efficient new entry. Retail prices must fall a long way for New Zealand to catch up with the rest of the world and only competition will provide the momentum for this. This is bad news for the long-suffering New Zealand consumer.”

Vodafone unloads with both barrels
In a letter to the commission, Telecom had requested a three-week delay to give it more time to organise a response to the commission’s comments on its preliminary undertaking.

Vodafone’s correspondence on the issue - made public on the commission’s website today - is considerably more ferocious.

In a letter dated April 3, the company’s general counsel, David Kreider, accuses the Commerce Commission of a long list of procedural failures in relation to its responsibilities under the Telecommunications Act (2001).

Mr Kreider says these procedural failings, detailed over five pages, have “led to a number of substantive errors including reviewable errors of fact and errors of law."

Futher, Mr Kreider alleges a “breach of natural justice” under the New Zealand Bill of Rights Act (1990).

Under Mr Kreider’s reading of the law, Vodafone, as an owner of mobile infrastructure, subject to a public investigation, has a right to be informed and heard. Mr Kreider says Vodafone has not been kept appropriately informed.

The general counsel goes on to threaten legal action if the commission does not review its process; specifically, “if Vodafone has not heard from the commission by 4pm on Tuesday, 7 April” the company "will consider filing judicial review proceedings".

On April 7, the commission wrote to Mr Kreider, telling him there would be a substaintive response to the issues he had raised on April 9.

In its letter to all telcos this morning (April 9), Ms Mazzoleni says the new time table is in response to Telecom’s request for an extension.

In his April 3 letter Mr Kreider also appears to be in no hurry to move things along, writing that "Vodafone suggests that the next stage proposed by the commission (the giving of revised undertakings) be deferred while the commission considers the matters raised by this letter."

The commission says it will futher review its timetime as its investigation proceeds. One thing is for certain: the pace will not pick up.

A spokesman for Vodafone flatly rejects that the company has any intention of slowing the process with its legal threat: "We want the investigation completed as soon as possible. Uncertainly about regulation is bad for business."

The spokesman said Vodafone wanted the commission to release its cost-benefit model earlier in the process, before the carrier submitted its final undertakings. That is, it wanted a change in the order of the procedure rather than a delay. Under its revised timetable, the commission will give all telcos a chance to submit revised undertakings after its draft report.

He with the biggest wallet wins
"It's a flashback to the 1990s when incumbents routinely challenged the regulator, those with the biggest wallet won, and the hapless customers just kept on wearily paying in excess," comments Tuanz chief executive Ernie Newman on today's delay.

In their submissions, Telecom and Vodafone both favour maintaining the voluntary deeds they signed last year on termination rates (their rationale is detailed here). Tuanz says the pair's charges are too high, inflating the average annual mobile phone bill by $300.

The termination investigation delay is a double blow to NZ Comms, coming on the back of the commission’s decision to delay a decision on whether it will investigate national roaming charges.

Roaming charges are also crucial to NZ Comms as its subscribers will flip onto Vodafone’s network when travelling outside the areas where it has built cell towers so far: Auckland, Wellington and Christchurch.