Wellington, March 26 NZPA - Vodafone has joined Telecom in criticising the Commerce Commission's call for drastic reductions in mobile termination rates, saying cutting rates will not necessarily mean savings will be passed on to customers.

Termination rates are the amount mobile phone companies charge other carriers to terminate calls on their networks and the commission is investigating whether mobile-to-mobile, fixed-to-mobile and text message termination should be regulated.

Vodafone today said the Australian Competition and Consumer Commission had stopped reducing mobile termination rates, partly because savings were not being passed on to customers.

The Australian experience was that the incumbent fixed line operator, Telstra, had only passed on 25 percent of the reduction in termination rates to consumers, said Paul Brislen, Vodafone's external communications manager.

"In fact, despite mobile termination rates being lower in Australia, the price of making a fixed-to-mobile call is higher than it is in New Zealand."

Vodafone estimated that over three years Telstra had pocketed around A$715 ($NZ895) million that should have gone to the customer.

In New Zealand there was a deed of undertaking that legally required Telecom and Vodafone to pass on all of the savings to customers.

"In the first 21 months the deed was in effect, customers saved $21m and we estimate that over the five years of the deed customers will save at least $90m. Unfortunately, the deed will cease to operate should the Commerce Commission regulate the industry," Mr Brislen said.

"If the Commerce Commission is to regulate the industry it must be to the benefit of the customer. Simply taking money from one company and giving it to the other in the hope that customers will somehow benefit just does not work. This has been the experience in Australia. We should not repeat their mistake."

Yesterday Telecom also questioned the commission's benchmark figures for its warning over proposed wholesale mobile termination rates.

The commission used a figure of 6 cents per minute (cpm) for Australia in its benchmark, but the Australian regulator has this month rejected this as being unrealistically low, Telecom said.

Commission chairwoman Paula Rebstock said the mobile termination rates could be as low as 7cpm for mobile-to-mobile and fixed-to-mobile voice calls, and 1c per text.

Vodafone had offered rates starting at 15cpm and reducing over time to 11cpm for voice calls, and text rates starting at 9.5c and reducing over time to 7c.

Telecom had offered the commission rates starting at 16cpm and reducing over time to 10cpm for voice calls, and a flat rate of 3.5c per text.

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