Jury still out on mobile regulation

Regulators in New Zealand have produced their first report into the mobile calls market since mobile termination rates were regulated from May.

The regulation of termination prices was introduced following years of controversy over mobile termination rates in New Zealand. The huge price difference between ringing someone on your network as opposed to another network meant the country had 4.7 million mobile phone accounts for only 4.3 million people.

In a series of graphs, the Commerce Commission shows how the market has performed over the years.

There has been a continued trend towards declining price differentials between on-net and off-net calls and a growing percentage of off-network calls.

But while it looks like there has been some acceleration of these trends since regulations were imposed in May, at least in calling revenues, the "success" of regulation to date seems limited.

I note the biggest rise in market share for cross-network calls came late last year, maybe because telcos were so frightened of prospective government action they took pro-active pricing measures to boost cross-network traffic.

Commissioner Patterson says he expects the trend towards lower calling prices and smaller price differentials between on-net and off-net calls to accelerate in the coming months, something we'll see in future quarterly reports, with the next one due in December.

Patterson said there is still a long way to go and he warned of further regulation if the price difference between on-net and off-net calls did not decrease further.

As Paul Brislen of the Telecommunications Users Association of NZ says: "The next few months will be critical."