Competition fails to slash call prices

Last updated 13:03 09/08/2012
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HOLDING UP: Call volumes have stagnated, but it can be assumed this remains a profitable industry.

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2degrees chief executive Eric Hertz has claimed mobile call prices have fallen by 30 per cent across the board since the third operator entered the market in August 2009.

But figures from the Commerce Commission tell a slightly surprising story. The average price of a mobile phone call has actually fallen by just half-a-cent a minute.

Credit where it is due. 2degrees slashed casual prepay calling rates when it launched, charging 44 cent-per-minute and halving what was then the going rate of 89c per minute.

Telecom and Vodafone have responded with price cuts. Telecom began undercutting 2degrees in January, through its Skinny brand, which is offering casual rates of 39c/minute.

But casual prepay rates are only part of the story. The price "on account" customers and big businesses pay for mobile calls has always been much lower.

The latest market monitoring report published by the Commerce Commission last month said the average price people paid to call within networks - Vodafone customers calling other Vodafone customers for example - has held steady at 21c per minute since October 2009.

The average price paid for "off-net" calls between networks has fallen from an average of 52c per minute to 38c per minute over the same period.

That led the commission to conclude prices were coming down. But that is only just true, the reason being that the proportion of off-net calls as a percentage of overall mobile traffic rose from 11.4 per cent to 17.6 per cent over the period.

We may be paying less for off-net calls, but thanks in part to the fact we now have three carriers, more calls are off-net.

Taking that into account, based on the commission's figures, the average cost of a mobile phone call edged down only fractionally from 24.5c per minute soon after 2degrees' launch in October 2009 to 24 cents in July this year. Needless to say that is not a calculation the commission included in its report. 

Call volumes have stagnated, but it can be assumed this remains a profitable industry.   

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