Commenting on the Commerce Commission's 2008 telecommunications market monitoring report, Mr Newman said TUANZ agreed with the commission's assessment on the distorting effect that excessive termination charges in mobile were having on competition.
"These charges are so far above actual costs that they have allowed the two mobile operators to ring-fence their networks and charge a major penalty to people who want to call their network's customers from another network's phone.
"They mark this disparity in a friendly way as cheap, or even free calls or texts between callers who are both on the same network. But what this price really does is impose a large, unjustified surcharge on calls that cross from one network to another."
The scale of the problem was well illustrated by a survey referenced in the commission's report, Mr Newman said.
The survey showed that nearly all of a sample of students who had a Telecom mobile phone had a Vodafone one as well to allow them to call friends who were on either network while avoiding those penalty charges.
When thousands of people had to carry two phones and pay two accounts to avoid artificial price penalties, it was time for the commission to act, he said.
Such a cost impost had no place in an open market and should not be there in the first place.
"It costs large business users, as well as personal users, very dearly and the costs flow right through the economy," Mr Newman said.
In its report, the commission said signs of increasing competition were seen in fixed-line telecommunications markets in 2008, but the competitive environment for mobile services was relatively unchanged from previous years.
Commission telecommunications branch director Osmond Borthwick said 2008 was another year of positive change for New Zealand telecommunications markets with the successful introduction of local loop unbundling and strong growth in the broadband market.
About $1.5 billion was spent on telecommunications-related capital investment in the 2007-08 financial year, he said.
Much of that was by Telecom to replace existing assets, but there was also spending by NZ Communications in rolling out the first stage of that company's mobile network.
The report showed signs of increasing competition during 2008 in fixed-line markets, Mr Borthwick said.
Fixed-line average calling prices continued to fall in 2008, although list prices had not shown much movement.
Better deals for consumers largely emerged in the form of new bundled offers, often incorporating calling, line rental and broadband, the report said.
Those offers were most competitively priced in Auckland, where exchanges had been unbundled allowing other providers to offer fixed-line services, and in Wellington and Christchurch, where TelstraClear provided infrastructure competition.
The broadband market continued to grow strongly through most of 2008, as Telecom lost a further 7% of the retail broadband market, with its share of the market now 57%.
Total broadband connections, including fixed wireless connections, reached 915,000 by the end of December, the report said.
Latest OECD figures, for June 30, 2008, estimated there were 20.4 broadband subscribers per 100 population in this country.
That was 96% of the OECD average, giving New Zealand a ranking of 19 out of 30 in the OECD.
Unbundling showed strong growth in the second half of 2008, with around 25,000 lines unbundled by the end of 2008, the report said.
Apart from two innercity Wellington exchanges, all of the exchanges unbundled to date were in Auckland.
The commission assessed Telecom now faced competition in 37 out of 57 primary un-bundled copper local loop backhaul links from local exchanges.
The general quality of broadband services as tested from central sites improved over 2008 with major internet service providers investing in extra network capacity.
In the mobile services market, the competitive environment remained relatively unchanged from previous years, despite some positive developments, the commission said.
