Telcos accused of price-fixing

New Zealand's two largest telcos are facing accusations a pricing agreement between them is a "cash cow" that hikes costs for consumers.

The deal covers mobile termination rates (MTRs), the fees phone companies charge rivals to use their networks.

Critics claim the rates agreed by Telecom and Vodafone are among the highest in the world.

The Commerce Commission will release a draft report on the subject tomorrow.

While the commission has refused to reveal details in advance, the Telecommunication Users Association of New Zealand said MTRs added hundreds of dollars to mobile bills every year.

Chief executive Ernie Newman said the MTR was added to the retail rate - the cost of connecting the call - which meant customers were effectively charged twice.

"It keeps these prices much higher than they need to be."

Mr Newman wants the draft report to propose regulating the charges, which he says should be lower than the voluntary reductions proposed by Telecom and Vodafone in March.

Telecom spokesman Mark Watts and his Vodafone counterpart, Paul Brislen, both said MTRs were only one factor in determining the cost of mobile calls.

"It isn't the only factor, and focusing yet again on MTRs as if they're some magic bullet seems like a bad joke that's gone on and on and on," Mr Brislen said.

Both companies said the cost of mobile calls had dropped an average 18% a year in each of the past three years.

New network 2degrees has yet to launch, but is already claiming Telecom and Vodafone's MTRs are blocking cheaper calls. 2degrees says MTRs for calls are six to eight times the cost of providing the connection, and for texts it claims they are 100 to 1000 times the cost.

The Commerce Commission has been pushing for regulation, and started its latest investigation in November.

In March, Vodafone proposed MTRs starting at 15c a minute for calls, reducing to 11c by 2015.

The MTR for text messages messages would be 9.5c, reducing to 7c.

Telecom offered rates starting at 16c a minute for calls, reducing to 10c by 2015.

There would be a flat rate of 3.5c for texts.

The commission argued rates could be as low as 7c a minute for calls and 1c for texts, and asked Telecom and Vodafone to submit proposals last month.

The commission's final report is to be delivered in December.

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