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Commerce Commission delays damaging industry

21 July 2006

Commerce Commission delays damaging creation of mobile competition

Econet Wireless New Zealand (Econet) today publicly expressed concern about how long it is taking the Commerce Commission to make judgments on the anti-competitive behavior of monopoly businesses.

Econet welcomed the Telecommunications Commissioner's announcement on 10 May that he would consider whether certain behavioural practices by the incumbents were deterring entry. However, that consideration seems to have stalled.

In the meantime, Econet filed a complaint with the Commerce Commission over six weeks ago regarding those very practices. Econet is concerned that Vodafone decided to cut prices and lock in customers for up to three years, at the same time that Econet opened its switch site and commenced initial network build.

Econet is excited about mobile price cuts, and has budgeted real prices to drop up to 80% in New Zealand. However, it is concerned that locking in customers and closed network txting practices by incumbents with entrenched market positions is intended to inhibit competitive entry and is anti-competitive.

Network operators who have significant market power should be prohibited from engaging in this kind of behavior, as is often the case in other OECD markets where little or no competition exists.

New Zealand is a country where bad network behavior has traditionally been tolerated. Econet's chief project director, Tex Edwards, observed that the extraordinary Saturn/Telecom decision of 1998, where pocket pricing was permitted, and the outcome of the legendary Clear/Telecom dispute have prevented much needed network builds.

Edwards publicly urged the Commerce Commission to expedite analysis of its complaint, and the Telecommunications Commissioner to commence his investigation in terms of his May 10 letter, to facilitate desperately needed competition in the mobile phone industry.


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