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Cablegate: Lawsuit May Delay Decision On Mobile Termination

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS WELLINGTON 000538

SIPDIS

STATE FOR EB/CIP FOR AHYDE AND EAP/ANP FOR TRAMSEY
STATE PASS TO USTR FOR BWEISEL AND LCOEN
COMMERCE FOR 4530/ITA/MAC/AP/OSAO/ARI BENAISSA
COMMERCE FOR 6920/ITA/OTEC/MYLES DENNY-BROWN

E.O. 12356: N/A
TAGS: ECPS ECON ETRD NZ
SUBJECT: LAWSUIT MAY DELAY DECISION ON MOBILE TERMINATION
RATES IN NEW ZEALAND

REF: (A) WELLINGTON 461; (B) 04 WELLINGTON 882; (C) 04
WELLINGTON 598

1. New Zealand's two mobile-phone service providers have
gone to court to challenge the Commerce Commission's
recommendation that the government begin regulating land-to-
mobile phone charges. The court case throws into
uncertainty what had been an expected decision by the
Minister of Communications to follow the commission's advice
and oversee regulation of mobile termination rates. The
court review could take weeks or months to complete and
could be further complicated by the outcome of the coming
national elections.

2. The Commerce Commission -- New Zealand's anti-monopoly
watchdog -- in a final report issued June 9 took aim at the
now unregulated fees that mobile telephone networks charge
fixed-line operators to complete calls on their mobile
networks. In New Zealand, these rates are among the highest
in the OECD, the commission noted in its recommendation to
the Minister of Communications (ref A). The commission
expected that regulation would increase competition in the
domestic fixed-to-mobile market, resulting in lower retail
prices for fixed-to-mobile calls. Regulation also might
reduce the charges paid by U.S. residents when making calls
to New Zealand. AT&T and other U.S. companies have
protested increasing fees on calls they pass to mobile
phones in the country.

3. Vodafone New Zealand on June 29 filed papers in the High
Court in Auckland seeking a judicial review of the
commission's recommendation. A week later, Telecom New
Zealand joined the proceedings. In its court filing,
Telecom contended that the Commerce Commission had failed to
take sufficient account of public submissions during its
investigation into mobile termination rates.

4. The minister, David Cunliffe, can accept the
commission's recommendation, reject it or ask the commission
to reconsider its recommendation. However, a commission
official said July 11 that, because of the court case, the
minister is uncertain when, or if, he will issue a decision.
Because a court ruling could change or restrain his
decision, implementation of any decision he makes could be
delayed until the court case is resolved, the official said.

5. While other industries have previously mounted court
challenges to Commerce Commission decisions, this is the
first case to be filed against the commission under the
current telecommunications regulatory regime. That regime
came into force in 2002 with the establishment of a
telecommunications commissioner within the Commerce
Commission.

6. Comment: Potential regulation of mobile termination
fees could be further delayed -- or doomed -- by the outcome
of coming national elections. They are as yet unscheduled
but must be held by September 24. The opposition National
Party has indicated that it might oppose regulation of
termination rates. Its communications spokesman told the
New Zealand Herald that, if elected, the party would look at
the issue "from a fresh perspective." National and the
ruling Labour Party have been running neck-and-neck in the
opinion polls. At this point, it seems very possible that
neither party will attain a clear majority in Parliament,
requiring the winner to seek a coalition partner.

SWINDELLS

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