New offers by Telecom, Vodafone and 2 Degrees for mobile termination rates represented major progress, Telecommunications Users Association chief executive Ernie Newman said yesterday.
All three companies submitted new undertakings in response to the Commerce Commission's investigation into the termination rates.
Mr Newman said the offers showed that the process the commission was using, as defined in the Telecommunications Act 2006, was working.
"They also illustrate clearly the enormity of the gulf that has existed between the charges the carriers have been levying to receive calls from each other's network and the actual cost of doing so."
Telecom had offered to reduce the termination charge for voice calls by 24% from the offer it made just three months ago, and to cease charging a one-minute minimum, making the drop even greater, he said.
"Even more dramatically, Vodafone has offered a reduction of 87.4% on the charge it levies to receive incoming text messages."
The extent of those reductions vindicated the perseverance of the commission over a five-year period, Mr Newman said.
It also showed the legitimacy of the drive for corrective action by new entrant 2 Degrees, the association, and others, in the "Drop the Rate Mate" campaign.
Whether the undertakings were finally accepted by the commission in lieu of regulation was now a matter for the commission to determine, he said.
The association would not express a view on that until further into the consultation process.
"The commission has an intricate challenge to massage the undertakings to make them mutually compatible and then assess whether accepting them, or regulating, will give a better outcome in the long-term interest of end users," Mr Newman said.
Telecom chief executive Paul Reynolds said in a statement that Telecom's submission would see mobile termination rates drop by 62% over five years for both mobile-to-mobile and fixed-to-mobile calls.
Telecom's strong preference was an industry-based outcome that could give certainty to the market.
"This would be in preference to regulatory intervention, with significantly increased costs, the delay in the delivery of services and the market uncertainty that would necessarily result from it."
Telecom was disappointed and concerned that the commission's investigation had undermined the regulatory certainty that was achieved under the termination rate deeds agreed by Telecom and Vodafone with the Government two years ago, he said.
New Zealand's regulatory regime trailed international best practice in several important areas.
The most obvious of those was the lack of any merits review process which was holding the industry back and reducing investor confidence, Dr Reynolds said.
Vodafone general manager of corporate affairs Tom Chignell said Vodafone wanted a solution in place so the company could get on with competing and delivering value for customers.
Vodafone's undertaking provided wholesale termination rates of 1.2c on text and 12c on voice from April 2010 with an eventual reduction to 3c for voice.
That would take rates well below those in Australia, the United Kingdom and Ireland.
The text rate was much lower than most OECD countries, he said.
"The impact on Vodafone's business cannot be overstated.
"This reduces our wholesale revenue by $50 million in the first year, growing to more than $450 million over five years against prevailing rates.
"This is a material reduction for any business to absorb and will impact on Vodafone's ability to invest in solutions for our customers."
