Tuesday 9th November 2010 |
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New Zealanders are paying an average of 26% more for telephone calls from landlines than in other developed countries, according to the Commerce Commission.
The regulator said New Zealand’s high monthly line rental charged by Telecom, the country’s only operator with a nationwide network, led to the country’s poor ranking among Organisation for Economic Cooperation and Development countries.
The comparison of fixed monthly rental becomes “slightly” better when a caller made a large number of calls.
But the lack of infrastructure-based competition put “little constraint on Telecom’s ability to increase its monthly line rental” which consistently increased with the rate of inflation.
“Having no alternative to a plan with a fixed price for unlimited local calls favours those consumers who make a lot of local calls and disadvantages those who make a few,” said Ross Patterson, Telecommunications Commissioner, in a statement. “Consumers making few monthly calls effectively cross-subsidise consumers who make a large number of calls.”
A guarantee of free local calls has been fundamental to the way Telecom is regulated since its privatisation, almost 20 years ago.
Telecom has long complained that this constrains how it can charge for landline phone connections.
Telecom was not in a position to comment when approached this morning.
Over the past five years, Telecom has come under increasing pressure to drop its prices for mobile services and broadband, leading to heightened regulatory controls on the phone company, including an enforced operational separation.
Telecom is looking at a structural separation, where it will carve out its network business into a new company in a bid to tap government funds to roll-out fibre for high-speed internet nationwide.
New Zealand ranks 33 out of 34 OECD countries for low-usage fixed-line pricing, 29th for medium usage, and 23rd for high usage, while business usage ranks 19th. By and large, that’s better than Australia, which ranks 30th, 33rd, 34th and 34th respectively.
Australia has similar infrastructure dominance with Telstra.
The regulator said mobile pricing was high for medium and high users, though low-volume users faced cheaper prices than the international norm.
“The entry of 2degrees in the mobile market has had a significant impact in terms of consumer choice and competitive offerings” and has tariffs “significantly lower than that offered by Vodafone and Telecom,” the report said.
Broadband prices for low and medium usage was broadly in line with international norms, though “significantly higher” for high-volume usage. The broadband comparison was only from five countries.
Shares in Telecom and Telstra were unchanged at $2.08 and $3.42 in trading today on the NZX today.
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