More people making calls between rival mobile phone networks - watchdog

The Commerce Commission says more people are making calls between rival mobile phone networks - proving that recently price regulation is working.

The watchdog's third mobile monitoring quarterly report shows a continuation of the narrowing between the costs of on and off-net calls and texts (that is, calls to people on the same mobile phone network, and calls to people on a rival network). This has resulted in an increase in calling and texting between mobile networks.

“Encouraging progress continues to be made in increasing cross net traffic and decreasing on and off net price differentials,” said Dr Ross Patterson, Telecommunications Commissioner.

Previously, Best Mates-style plans that rewarded people for calling others on the same network were seen as stifling competition, and making life harder for newcomer 2degrees.

“The Commission expects the positive trends to continue and will prepare a more comprehensive report in July, when we have 12 months data.” Dr Patterson said.

Between November 2011 and January 2012, cross-network traffic increased by 2.0% for mobile calls and by 2.9% for text messages. At the same time, the price difference between on and off-net services decreased by 3.4% for mobile calls and by 3.0% for text messages. Since October 2009, cross-network texts have increased from 8.6% to 29.2%, while cross-network calls have increased from 11.4% to 20.4%.

In May 2011, the Commission released its decision regulating mobile termination rates, significantly reducing wholesale termination rates for mobile calls and text messages. Termination rates for calls were cut from approximately 15-17 cents to about 7.5 cents on 6 May 2011, and will be gradually cut to less than 4 cents by 1 April 2012, with further reductions until 2014. Termination rates for text messages dropped to 0.06 cents from 6 May 2011.

The changes to the termination rates were intended to address competition problems in the wholesale mobile market.

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

The third report covers the three months from November 2011 to January 2012. The anniversary report, which covers the February to April 2012 period, is due out in June 2012 and will comment on whether satisfactory progress on the indicators measured has been made.