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Carriers rail against trans-Tasman roaming regulation

Telcos from Australia and New Zealand have asked the governments of both countries to not regulate the cost of mobile roaming services between the two nations.
Written by Josh Taylor, Contributor

Optus, Vodafone, and Telecom New Zealand have urged the Australian and New Zealand governments to let the market drive down the cost of mobile roaming between the two countries, rather than seeking to regulate pricing.

In August, Communications Minister Stephen Conroy and his New Zealand counterpart Amy Adams released a draft report into the high cost of mobile roaming for customers travelling between the two countries. The report looked at a number of options to force telcos to lower their costs, including the introduction of wholesale and retail price caps, enhancing the regulators' powers, unbundling retail and wholesale mobile services, or using legislation to allow roaming users to become local end users.

The Telecommunications Industry Ombudsman has said that 7.5 percent of the billing complaints it received from customers in the 2011-12 financial year related to mobile roaming charges. This accounted for 3,500 complaints, or 1.4 percent of all complaints.

In submissions received on the draft report, telcos expressed their concern with the possibility of added regulation. Optus said in its submission (PDF) that, while it recognises roaming prices have been too high in the past, government intervention will impose "significant regulatory costs," would damage competition, and lead to higher prices in the long term.

Optus said that the heart of the problem was that most users were unaware of global roaming costs, but through growing awareness and consumers switching to roaming services like TravelSIM, roaming prices were being driven down. In conjunction with increasing consumer awareness and working with the telecommunications consumer protection (TCP) code, Optus also recommended that the price for wholesale services on international networks needed to be controlled, enabling retail costs for consumers to be kept lower.

"Optus submits that the Departments could enhance the effectiveness of retail transparency measures, by reducing artificial price floors imposed by the wholesale rates. Optus notes that some aspects of the way in which bilateral wholesale rates are set may display elements of market power that limit the effectiveness of wholesale competition," the submission stated.

Vodafone New Zealand (PDF) agreed with Optus, in stating that competition had improved recently, and more competition was coming in the form of customers switching to Wi-Fi for internet when overseas. Vodafone said that it didn't support price caps for global roaming or regulatory intervention, instead stating that the governments should just continue to monitor pricing to ensure competition is pushing prices down.

"Vodafone New Zealand will be bitterly disappointed if our hard earned competitive advantage in delivering market leading rates for trans-Tasman roaming is blunted or removed by some form of regulatory intervention into the trans-Tasman roaming market."

Newer market player in New Zealand, 2degrees (PDF) also said that competition was reducing roaming prices. The company said that, prior to 2degrees entry into the market in 2009, Australians visiting New Zealand could only roam to Vodafone, because at the time, it was the only GSM network in the country and since then, Vodafone has been forced to reduce its prices.

Telecom New Zealand (PDF) said that roaming markets were improving, especially as consumers were now more aware of the option to purchase a prepaid SIM from a local carrier when visiting either Australia or New Zealand. The telco said that there "is no evidence of market failure."

"Pricing is already low by comparison with other countries, and subject to competitive pressure, service quality and range is good, and consumer information and bill management initiatives are particularly impressive."

Telecom New Zealand warned of a "heavy-handed regulator regime" that would create inefficiencies in the market and would not help to reduce prices.

A joint submission (PDF) by the Australian Mobile Telecommunications Association and the Communications Alliance said that the TCP code, along with increased consumer awareness of the roaming costs, will address the "market failure" in global roaming costs.

"The Associations would prefer to see the regulators step back and allow the TCP code and other industry measures to be implemented, and current retail market offerings to be given time to have an effect on the market before further intervention is considered," the submission stated. "The Associations believe it would be imprudent to intervene further in the market at this point in time, before consumer awareness measures have been given time to have an impact on the market, and during a time of rapid technological developments and evolution."

Australian Communications Consumer Action Network (ACCAN) was in favour of the proposals (PDF), recommending that price caps should be implemented immediately and the regulatory powers in both countries be increased to ensure that prices do go down.

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