February 24, 2010 9:00am by David Farrar

Gifford on Mobile Market

It’s crunch time for the mobile phone market.

Will the Government step in and create a competitive environment that benefits New Zealand customers and businesses, or will it continue to let giant foreign-owned companies set the rules that allow them to gouge the economy?

I think we can conclude Adam favours regulation.

What has become the commission’s main concern, and quite rightly so, is how on-net pricing has distorted the New Zealand market.

In some countries on-net pricing is illegal. Here it has become the incumbents’ main marketing strategy. When users pay almost nothing to text someone on the same network, and far far more to text to a competing network, is it any wonder that more than 80 per cent of mobile to mobile voice traffic and more than 90 per cent of texts are on-net?

Mazzoleni doesn’t believe the problem will be fixed by letting the two major telcos set the rules.

She says there will continue to be a barrier to competition in both the mobile to mobile and fixed landline to mobile markets as long as mobile termination rates stay too far above the total service long run incremental cost, which is the tool the commission uses to assess price gouging.

The result of this lack of competition is that two-thirds of mobile customers pay some of the highest rates in the OECD.

And as I blogged yesterday we use our mobile phones far less than other countries, as we can’t afford to.