Feature Article

August 23, 2012

Australia, New Zealand Regulators Ponder Lower Roaming Rates

The Australian Competition and Consumer Commission (ACCC) and New Zealand Minister for Communications and Information Technology (DBCDE) are looking at ways to reduce mobile roaming costs for voice, data and texting between Australia and New Zealand.

It isn’t clear yet what might ultimately be done, but there is mounting pressure to allow users from either Australia or New Zealand to roam in the other country at reduced rates.

To be sure, international roaming is expensive, even though mobile service providers have reduced roaming profit margins of 1000 percent to 300 percent.

Regulators no longer believe that wholesale prices or profit margins for Australian and New Zealand mobile service providers are likely to fall significantly further, though.

The potential action on roaming costs in some ways would mirror reductions of wholesale pricing mandated by the European Community. Among the potential options are a mandated unbundling of roaming services so that any single customer could choose one operator to provide domestic communications and a different operator to provide trans-Tasman (between Australia and New Zealand) roaming services.

Another option would require mobile operators to provide mobile local access services, which enable roamers to act as local users in their destination, without having to swap subscriber information modules (SIMs) and without becoming unreachable on their original numbers.

New Zealand and Australia also could simply adopt price caps. Regulators also might require New Zealand and Australia to introduce lower wholesale terms of access available to a home network seeking to provide trans-Tasman roaming to its customers, producing savings which a service provider might or might not pass along to retail customers.

Requiring price transparency also might be contemplated, an act that would increase pressure on operators and allow regulators to act on pricing matters with greater understanding.

Regulators also would presumably need to convince legislators to enact new laws giving the regulatory bodies authority to act in such ways.

The inquiries simply illustrate the continuing role played by regulatory and legislative bodies in shaping the basic business models for contestants in the mobile services business.

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Edited by Brooke Neuman

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