Consumers should be concerned that their mobile phone rates won’t be coming down nearly as fast as they ought and that the big telcos – Vodafone and Telecom – may have successfully stifled competition.

It’s a complex business but mobile termination rates are what one telco charges another when you make a call to a competing mobile operator.  New Zealand has some of the highest termination rates in the world. Not only does this keep the cost of running your mobile high (hence New Zealanders are amongst the most prolific texters), it makes it nigh on impossible for competitors to enter the market.

Consumer along with the Telecommunications Users Association, Federated Farmers, 2 degrees and others joined a campaign last year called Drop the Rate Mate (see our August 2009 news item), to press for these termination rates to be regulated. They are in plenty of other countries. Vodafone and Telecom have been working just as hard to make sure they are not.

The Commerce Commission had until now taken the view that termination rates should be regulated. However, in a split decision, it now says it recommends accepting “voluntary” undertakings from the big two which would see the rates come down over time and also not to the levels it had originally recommended.

Consumer would also accept “voluntary” undertakings if they were as comprehensive as the commission’s original benchmarks but they are not. The fact that the two telcos could for years keep the rates so high and then under pressure of regulation drop them so substantially puts paid to their arguments about cost.

There was a dissenting voice in the report, that of commissioner Anita Mazzoleni who said that the telcos’ undertakings would continue to ensure a “playing field that is not level and this will impede the benefits competition will otherwise deliver to New Zealand end users”. We support this view and will be making that known to Communications and Information Technology Minister Steven Joyce.

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