Mobile phone costs to drop

The Commerce Commission has proposed big cuts in the wholesale price of calls to mobile networks.

The move will drop the price of calling mobile phones by 9c or 10c a minute, a  telecommunications lobby group says.

The Telecommunications Users Association of New Zealand (Tuanz) has welcomed the commission's proposals, while warning they could lead to an increase in text message spam.

The commission issued its preliminary views today on the regulation of calls and texts to mobile networks, known as the mobile termination access services.

Its view is that the wholesale price for voice calls to a mobile network should be set at a cost-based benchmark, starting at a rate of 4.68c per minute from April 1. That would be down from around 14cpm now, and would fall to 3.91cpm by April 1, 2015.

For text, the commission adopted a bill and keep approach, under which networks would terminate calls from other networks at no charge.

That recognised that the cost of terminating text was low and inter-carrier traffic was fairly balanced, the commission said.

Telecommunications Commissioner Ross Patterson said the reduction in voice call prices was justified because of unique market conditions in this country.

It was necessary to remove a significant, long-standing and growing barrier to efficient expansion by a small mobile network operator, Dr Patterson said.

"The removal of this barrier will promote vigorous competition for the long term benefit of consumers."

Tuanz chairman Pat O'Connell said the proposed regulated rates would put this country in line with the best in the world.

A rate drop from around 14cpm to 4cpm represented a significant fall in costs for phone companies, and Tuanz called on the telcos to pledge their support for pass through of those savings of at least 90 percent or more, Mr O'Connell said.

Tuanz would like to see the price of calling a mobile drop by 9c or 10c a minute across the board.

"If this regulation simply leads to increased margins for some of the telcos, to phone companies pocketing the savings and consumers seeing no benefit, then we will be asking the commission to look at retail price controls for the sector."

The main concern for Tuanz from the commission's proposals related to text spam.

The pure bill and keep model for text could lead to an increase in text spam, Mr O'Connell said.

The commission had excluded texts originating from overseas from its ruling, allowing telcos to continue managing text spam sent from another country, but there was no scope for blocking New Zealand-based text spam.

The commission is seeking submissions and cross-submissions on its proposals. Following submissions, it will hold a conference with interested parties before releasing a final determination, expected in March.