Cellular Telephone Service Performance
23. The following table summarises New Zealand's ranking for the low, medium and high user OECD cellular service baskets using input price data as at February 2005. The baskets include a set number of cellular and national calls, and connection charges (if any) distributed uniformly over three years.
| | Call minutes per month | Basket price as % of OECD average | Per annum spend (NZ$ ex GST) | Country Ranking (out of 30) | Price reduction to rank in OECD |
|---|
| 1Q | 2Q |
|---|
| OECD high user | 330 | 174% | $1,899 | 29 | 60% | 44% |
|---|
| OECD medium user | 158 | 172% | $1,086 | 30 | 57% | 42% |
|---|
| OECD low user | 40 | 127% | $318 | 23 | 48% | 17% |
|---|
24. In general New Zealand's relative cellular service pricing performance ranks in the bottom half of the OECD for pricing. For cellular usage greater than about 30 call minutes per week, New Zealand's relative performance ranking is amongst the poorest in the OECD.8
25. The benchmark results do not include larger users, such as those with total cellular handset usage in excess of about 20,000 minutes a month, because such business is usually subject to competitive bidding and the average per minute pricing is not available.
26. As part of its investigation of mobile termination, the Commerce Commission commissioned a special report on mobile pricing in New Zealand relative to other OECD countries. That report9 reached the following conclusions:
Using updated tariff sets for February 2005, New Zealand ranks out of 30 OECD countries:
- 23rd for the low user basket of services
- 29th for the medium user basket
- 30th for the high user basket,
- 30th if the three baskets are weighted equally.
…When actual data from New Zealand is used, despite improvements for both low and medium user baskets, New Zealand remains at the bottom of the OECD rankings for a combined basket.
We believe that this indicates that regardless of how a user basket is defined, what year's data is examined or how currencies are converted, New Zealand's mobile tariffs remain some of the highest in the OECD.
Other Factors
27. Econet Wireless New Zealand (Econet) has said that it will commence the first step in the rollout of its mobile network with the construction of a core radio network in the Auckland CBD during the first half of 2006.
28. The Commerce Commission recently completed a Schedule 3 investigation into the case for regulation of fixed-to-mobile voice call termination rates (MTR) and recommended the regulation of MTR on 2G networks. The Minister subsequently requested the Commission to reconsider aspects of its recommendation.
29. Verizon reported that in the 2003/2004 financial year, nearly two-thirds of homes in its service areas subscribed to both wireless and wireline services, and wireless calls outnumbered calls from traditional wireline telephones.
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