New Zealand’s $2.7 billion mobile market will be looked at by regulators “in the coming year”, the Commerce Commission says.
The competition watchdog confirmed the review after Communications Minister Simon Bridges sent a letter to Telecommunications Commissioner Stephen Gale suggesting it examine why there are relatively few retailers of mobile phone services in New Zealand.
The Government is not currently able to direct the commission to undertake market reviews, but Bridges made it clear he thought an investigation was warranted.
“I would encourage you to review the mobile market in the near future, to test whether competition is working effectively,” he told Gale in letter published on a ministry website last week.
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A commission spokeswoman said a review of the mobile market was on its work plan for this coming year.
“We are currently considering the scope of the review – a process that will involve engaging with the industry,” she said.
Bridges and the Telecommunications Users Assocation (Tuanz) are questioning why there are relatively few “mobile virtual network operators” (MVNOs) that resell services provided by the three network operators, Spark, Vodafone and 2degrees.
One example of an MVNO is The Warehouse, which launched its Warehouse Mobile service in 2015.
“In other countries, these services are an important part of the mobile ‘ecosystem’, and the widespread availability of such services has led to better outcomes for consumers,” Bridges said.
Tuanz chief executive Craig Young said it had previously called for a review of the mobile market and it had also written to Gale “reiterating this point”.
Young said it was in favour of a “wide ranging review” to ensure that the market was delivering the best outcomes for consumers.
Spark spokesman Richard Llewellyn said New Zealand was already “very well served by three mobile service providers who compete aggressively on price, speed and coverage”.
But Spark would engage with the commission if it decided a review of the mobile market was warranted.
2degrees spokesman Mathew Bolland said it would be ambivalent about a review along the lines suggested by Bridges.
It would participate, but it was keen to support MVNOs and did not believe a review would affect its commercial strategy, he said.
The commission already carries out annual monitoring studies into the telecommunications market, including the mobile market, to benchmark prices and services internationally.
Its last report, published in June, said the carriers were bundling packages of voice calls, text messages and data for consumers at prices that were mostly below the OECD average.
But it said data-only offerings for mobile devices were expensive.
The commission conceded that making comparisons with other countries was difficult.
Young said the three mobile phone companies were launching new packages, but Tuanz wanted to make sure customers were getting what they deserved.
“There is some evidence from international research that our prices haven’t kept in line with international markets, so it would be good to run the ruler over it.”
The commission’s annual monitoring report was not very wide-ranging and the review should look at whether regulations were right, he said.
This month the Ministry of Business, Innovation and Employment published a study into the petrol market that was called for by Energy Minister Judith Collins.
A law change proposed by the Government would allow ministers to direct the commission to undertake such reviews in future.
Experts have suggested the commission might only have the resources to do one or two such studies each year.