Wellington, April 14 NZPA - Signs of increasing competition were seen in fixed line telecommunications markets in 2008, but the competitive environment for mobile services was relatively unchanged, the Commerce Commission says.

The commission released its 2008 telecommunications monitoring report today.

Commission telecommunications branch director Osmond Borthwick said 2008 was another year of positive change for New Zealand telecommunications markets with the successful introduction of local loop unbundling and strong growth in the broadband market.

The report showed signs of increasing competition during 2008 in fixed line markets, Mr Borthwick said.

But in the mobile services market, the competitive environment remained relatively unchanged from previous years, despite some positive developments.

Commenting on the report, Telecommunications Users Association Tuanz said mobile termination charges increasingly stood out as the main piece of unfinished business in telecommunications policy.

Apart from that, Tuanz said the report highlighted the success of the regulatory regime in encouraging investment and developing fixed line competition.

Tuanz chief executive Ernie Newman said termination charges were so far above actual costs they had allowed the two mobile operators to ring-fence their networks.

The price structure imposed a large, unjustified surcharge on calls that crossed from one network to another, Mr Newman said.

The scale of the problem was illustrated by a survey which showed that nearly all of a sample of students who had a Telecom mobile phone also had a Vodafone one.

"When thousands of people have to carry two phones and pay two accounts to avoid artificial price penalties, it is high time for the commission to act," Mr Newman said.

The report said fixed line average calling prices continued to fall in 2008, although list prices had not shown much movement.

Better deals for consumers largely emerged in the form of new bundled offers, often incorporating calling, line rental and broadband.

Those offers were most competitively priced in Auckland, where exchanges had been unbundled allowing other providers to offer fixed line services, and in Wellington and Christchurch where TelstraClear provided infrastructure competition.

The broadband market continued to grow strongly through most of 2008, as Telecom lost a further 7 percent of the retail broadband market, with its share of the market now 57 percent, the report said.

Latest OECD figures, for June 30 2008, estimated there were 20.4 broadband subscribers per 100 population in this country.

That was 96 percent of the OECD average, giving New Zealand a ranking of 19 out of 30 in the OECD.

Backhaul -- the final link connecting competitors to Telecom's local loop -- was an important component in the supply of broadband, and competition in the provision of backhaul services was growing.

In particular, FX Networks continued to expand its North Island fibre network and Vector Communications recently expanded its Auckland fibre network and entered into an agreement with Vodafone to provide backhaul services to 41 Auckland exchanges, the report said.

In the mobile services market, mobile calling minutes increased by 16 percent in the 2007/08 financial year.

Vodafone's Base plans, formerly excluded from the commission's monitoring reports, had now been included in the OECD benchmarking of New Zealand's mobile calling plans, the report said.

With that change, the average New Zealand performance across all baskets had improved from 127 percent of the OECD average cost to 84 percent.

Despite that, New Zealand's mobile calling volumes as a percentage of total calling volumes remained low by international standards, making up a quarter of total calling minutes compared to at least a third to a half in comparable countries.

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