Mobile phone users waiting for lower charges through a Commerce Commission decision on termination charges will be disappointed.
An industry insider told the Otago Daily Times that the commission's recommendation to accept the industry's commitment to reduce mobile termination rates (MTRs) would not make a "blind bit of difference" to the amount the major companies - Telecom and Vodafone - charged customersMobile termination prices are the wholesale charges mobile phone companies charge for ending calls or texts from other fixed or mobile networks.
Regulators around the world regard termination rates as a bad thing for consumers and have been trying to get them as close to zero as possible.
In New Zealand, Telecom and Vodafone swap about $50 million in revenue each year as they pay each other for MTRs.
However, reducing those rates from October would not affect consumer charges, the insider said.
Only increased competition would do that.
The commission yesterday, in a split decision, rejected regulation as the means to reduce the costs of mobile phone calls, with telecommunications commissioner Ross Patterson recommending the Government accept proposals put forward by Telecom and Vodafone as an alternative to regulation.
The two telecommunications companies offered to slash their charges for routing calls to customers from their current rate of 15c a minute to 0.1c a second by the start of 2014 and do away with most charges for routing texts.
An associate commissioner, Anita Mazzoleni, believed mobile termination access services should be regulated while the other commissioner, Gowan Pickering, backed Mr Patterson.
Telecommunications Users Association chief executive Ernie Newman said the association, which represented 450 mainly large business users, was surprised and disappointed by the recommendation.
"While we recognise the enormous amount of consultation and research that has gone into the commission's investigation over these past six years, we think the commissioners have got it wrong."
The process leading to the voluntary undertakings demonstrated the "breathtaking gap" between the actual cost of terminating calls from competing networks and the amount the two major operators had been charging, he said.
While the reduction of about 80% appeared generous, it was still insufficient to address the barrier to competition posed by those excessive charges.
Vodafone corporate affairs general manager Tom Chignell said the outcome was pragmatic given the uncertainty around a long regulatory process and whether the savings would end up in the pockets of consumers.
Telecom has about 2.3 million mobile phone customers, Vodafone 2.5 million.
But new mobile company 2degrees, which this month announced it had signed up 206,000 customers in its first six months, criticised the decision.
Its regulatory and commercial manager, Bill McCabe, said the commission appeared to have squandered a "golden opportunity to finally bring New Zealand mobile prices into line with the rest of the developed world".
Broadcasting Minister Steven Joyce has the final say on the recommendations.
He issued a statement yesterday calling for submissions on the commission's final report.
Submissions will have to be on new matters raised on the report or that update comments already made in submissions to the commission.
Submissions close March 8.
