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"Cut Rates Now" Says Mobile Phone Campaign

DROP THE RATE, MATE! (Airnet NZ, Consumer New Zealand, Federated Farmers, the Federation of Maori Authorities, the New Zealand Union of Students' Associations, the Telecommunications Users Association, 2degrees and Unite)

MEDIA RELEASE Wednesday 21 October 2009 For Immediate Release

"Cut Rates Now" Says Mobile Phone Campaign

There should be no more opportunities for telecommunications companies to delay proper competition in the mobile and land lines markets, Drop the Rate, Mate! has told the Commerce Commission.

The Commission is currently considering whether to confirm its draft recommendation that the Government needs to properly regulate the mobile phone market to stop Telecom and Vodafone using artificially-high mobile termination rates (MTRs) which have the effect of keeping competitors out of the market.

As part of this, the Commission asked Telecom, Vodafone and 2degrees to put forward their best offers to "voluntarily" reduce their MTRs.

Telecom and Vodafone responded with offers that are still far in excess of the Commission's benchmarked, cost-based rates - and they don't want to get to even those levels until 2015 at the earliest.

Drop the Rate, Mate! spokesman Matthew Hooton said the offers were a clear example of companies making last-minute offers to ward off regulation and prevent proper competition.

"Our submission has recommended that these so-called 'voluntary' offers to slowly reduce MTRs over time should be rejected," Mr Hooton said. "Instead, we've urged the Commission to reconfirm its draft recommendation and recommend to Communications and Information Technology Minister Steven Joyce that MTRs should be regulated just as they are in most of the rest of the world. That's the only way to get true competition."

Drop the Rate, Mate! is supported by Airnet NZ Ltd, Consumer New Zealand, Federated Farmers, the Federation of Maori Authorities, the New Zealand Union of Students' Associations, the Telecommunications Users Association, 2degrees and the Unite union, and more than 8,000 Kiwis who have signed up online at www.droptherate.org.nz

Mr Hooton said the rates being offered by the incumbents are way too high in the short term, and would continue to hamper true competition.

"It's not until 2015 - six years from now! - that the rates would reach the fair levels recommended by the Commission," he said. "Kiwi consumers shouldn't have to wait six years to see the benefits of lower MTRs, nor should new entrants have their businesses penalised for such a long period."

The Commerce Commission has been working on the MTR issue for six years and Mr Hooton said this wasn't the first time incumbent telecommunications companies have made offers to voluntarily reduce rates.

"Our view is that they shouldn't be allowed to keep asking for one more chance just to delay the introduction of proper market rules," he said. "The undertakings process has not worked and the time for proper market rules has come. We are confident both the Commission and Mr Joyce will make the right decision later this year and early in 2010, which will deliver lower retail prices for all mobile and land-line users in New Zealand."


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