The Commerce Commission has introduced a new measure to monitor phone companies, referencing Vodafone's $840 million purchase of TelstraClear. But a customer lobby group says it's taking the wrong approach.
The Commerce Commission has introduced a new measure to monitor phone companies, referencing Vodafone's $840 million purchase of TelstraClear (completed yesterday after Commission clearance Tuesday).
The watchdog will extend its monitoring of the telecommunications market to include the price of calls from landlines to mobiles (it already requires Telecom, Vodafone and 2degrees to submit monthly reports on cellphone call costs, usage patterns and customers numbers following regulation of mobile termination rates or wholesale network charges last year).
The merger means that Vodafone will move from being a provider of mainly mobile services to also having the fixed line services currently owned by TelstraClear, the watchdog said in a statement.
“The merger will bring about major changes in the telecommunications sector. Now that the merger has been confirmed, we plan to observe its impact on fixed and mobile pricing – separately and in bundles – and monitor any changes in the market,” Telecommunications Commissioner Dr Stephen Gale said.
“We aren’t anticipating any anti-competitive pricing arrangements coming from the newly merged entity. However, we are required to monitor developments in the telecommunications sector,” Dr Gale said.
On Tuesday, Telecommunications Users Association head Paul Brislen welcomed the merger.
A combined Vodafone-TelstraClear would have the scale necessary to take on Telecom and shake up the market, Mr Brislen told NBR.
However, he was also wary that no monitoring provision was immediately announced.
So is Mr Brislen pleased with today's development?
To a degree.
"Broadly speaking we’re supportive of ongoing monitoring of competition related issues. With market dominance now centred around two companies, there’s always a risk of the cosy duopoly and the Commission is to be applauded for extending its monitoring regime," the Tuanz boss told NBR this morning.
"I’m not sure yet that measuring fixed to mobile pricing is the best way to do that.
"Changes to the mobile termination rate has done little to directly affect the price of mobile calling or TXTing."
Price changes in the mobile sector are largely as a result of 2degrees Mobile’s entry and its aggressive pricing and the introduction of new and innovative services like rollover data, Mr Brislen said.
"Vodafone now has a strong set of integrated assets across both fixed and mobile, but also across retail and wholesale and it’s the potential for anti-competitive behaviour in this regard we would most like to see assessed and monitored.
"Tuanz would hope to see Vodafone provide wholesale access to its fibre backhaul network to compete with Telecom’s current service and so drive down the costs of broadband for users – that’s the kind of area we would like to see monitored."
2degrees welcomed the move.
"The Commerce Commission's decision to add monitoring of fixed-to-mobile to its existing mobile-to-mobile reporting makes sense. In recent years there's been significant structural change to the industry to address a lack of competition in the NZ telecommunications market. Now, with two large players merging, increased vigilance by the Commission is a positive, proactive step."
