Identifier
Created
Classification
Origin
06WELLINGTON331
2006-05-01 05:24:00
UNCLASSIFIED
Embassy Wellington
Cable title:  

ONCE AGAIN, NEW ZEALAND REGULATOR SUPPORTS CUT IN

Tags:  ECPS ECON ETRD NZ 
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VZCZCXRO9337
RR RUEHNZ
DE RUEHWL #0331 1210524
ZNR UUUUU ZZH
R 010524Z MAY 06
FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC 2736
INFO RUEHBY/AMEMBASSY CANBERRA 4389
RUEHNZ/AMCONSUL AUCKLAND 0734
RUCPDOC/USDOC WASHDC 0044
UNCLAS WELLINGTON 000331 

SIPDIS

SIPDIS

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

E.O. 12958: N/A
TAGS: ECPS ECON ETRD NZ
SUBJECT: ONCE AGAIN, NEW ZEALAND REGULATOR SUPPORTS CUT IN
MOBILE TERMINATION RATES

REF: A. 2005 WELLINGTON 616


B. 2005 WELLINGTON 461

C. 2004 WELLINGTON 598

UNCLAS WELLINGTON 000331

SIPDIS

SIPDIS

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

E.O. 12958: N/A
TAGS: ECPS ECON ETRD NZ
SUBJECT: ONCE AGAIN, NEW ZEALAND REGULATOR SUPPORTS CUT IN
MOBILE TERMINATION RATES

REF: A. 2005 WELLINGTON 616


B. 2005 WELLINGTON 461

C. 2004 WELLINGTON 598


1. The New Zealand Commerce Commission for the second time
has issued a recommendation to reduce the high fees that
mobile phone companies charge to terminate calls on their
networks. Before acting on the recommendation, the
Communications Minister has allowed three more weeks for
public submissions on the issue. That gives New Zealand's
two mobile-phone service providers time to come up with yet
another offer of voluntary rate cuts to forestall regulation.


2. The commission, which functions as New Zealand's
anti-monopoly watchdog, in May 2004 began investigating
mobile termination rates, which are the fees that fixed-line
network operators are charged when calls are completed on
mobile telephone networks (ref C). U.S. telephone service
companies have complained that fees incurred on calls passed
into New Zealand are among the highest of OECD countries.
The commission in June 2005 issued a report recommending that
the rates be regulated and, thus, reduced (ref B). The
commission found that a lack of competition in the wholesale
market had resulted in the two mobile network operators
setting rates significantly higher than the costs they
incurred.


3. Communications Minister Cunliffe in August 2005 bounced
the issue back to the commission, asking that it examine
offers made by the country's two mobile-phone companies --
Vodafone New Zealand and Telecom New Zealand -- to
voluntarily reduce their termination rates (ref A).


4. On May 1, Cunliffe made public the commission's final
report, which again recommended regulation of the fees and
extended its suggestion to all voice calls. The commission's
previous recommendation excluded calls made over
third-generation (3G) mobile networks so as not to discourage
investment in the new 3G technology. Cunliffe can accept or
reject the commission's recommendation or again send it back
to the commission for reconsideration. If he accepts the
recommendation, the commission then would set the mobile
termination rates, most likely based on benchmarking against
other OECD countries.


5. The commission estimated the cost of providing mobile
termination to be about NZ 15 cents (US 9.5 cents) per
minute, while the New Zealand mobile network operators have
been charging an average of NZ 27 cents (US 17 cents) per
minute. The fee charged overseas carriers has been almost US
6 cents higher than that. Both Vodafone and Telecom oppose
regulation of the mobile fees.


6. A copy of the commission's 112-page decision can be found
on its website, www.comcom.govt.nz.


7. Comment: Vodafone and Telecom already have had one
opportunity to submit a proposal for voluntary rate
reductions. Minister Cunliffe's patience appears to be
wearing thin, especially as public opinion has turned against
the large telephone companies. He is likely to accept the
commission's recommendation.
McCormick