Telecom landline customers face a steep rise in the cost of off-peak national calls from next month.
The company is increasing the cost of calls by more than 25 per cent from 19 cents a minute to 24c.
That means for some people it will be cheaper to call Europe on their mobile phones than neighbouring towns on their landlines.
The price rise comes despite growing competition and a 19 per cent drop in Telecom's voice call revenues to $518 million in the second half of last year. Telecom chief executive Paul Reynolds is on a $7m salary and incentive package.
The company's toll call revenues have been falling more steeply than any other major part of its business as more customers use internet phone services such as Skype, discount calling cards on sale at dairies, and a recent spate of cheap mobile offers for both overseas and national calls.
Several companies offer lower-priced national and international toll calls, some without requiring customers to switch their line rental away from Telecom.
Slingshot, the third biggest residential phone provider, has peak and off-peak national toll calls for 8 cents a minute.
Vodafone is offering pre-pay mobile customers calls to landlines for as little as 6 cents a minute, under a flat rate $12 monthly plan.
Titahi Bay resident John Watson, a lifelong Telecom customer, said the increase was unreasonable.
"Telecom have got their problems with XT and all the rest of it, but I don't think they should be trying to make it up in this way.
"I thought they had better regard for their customers."
Telecommunications Users Association chief executive Ernie Newman said the toll call market was highly competitive and could be left to market forces.
"People do have options."
Consumer New Zealand chief executive Sue Chetwin agreed.
"If you don't like it, shop around. There are some quite aggressive phone plans."
Telecom spokeswoman Emma-Kate Greer said that, overall, Telecom's calling and access rates were 20 per cent lower than they were five years ago.
If customers made a lot of toll calls, they were best off on a plan such as Anytime or Total Home, both of which included free national calls.
Telecom contacted customers throughout the year to let them know the plan that gave them best value, she said.
- © Fairfax NZ News