Investigation into Schedule 3 Welcomed

6 November 2008

MEDIA RELEASE

NZ Communications welcomes investigation into Schedule 3

The announcement today of the Commerce Commission’s decision to launch an investigation into Schedule 3 – Mobile to Mobile Termination - has been welcomed by new mobile entrant, NZ Communications Ltd.

Mobile termination is essentially the fee that one mobile operator charges to another mobile operator for access – making a call – to their customers.

“New Zealanders, in particular, suffer some of the highest mobile tariffs in the OECD, the lowest levels of industry competition and some of the lowest mobile usage levels as a result,” said Mr Bill McCabe, Commercial Director for NZ Communications.

The effect of cost-based mobile to mobile termination regulation would be lower prices and enhanced choice and quality to consumers. It will also facilitate competitive entry by new mobile players.

The current high mobile termination rates exacerbate incentives for large mobile operators to set high on-network and off-network price differentials (closed net pricing). This creates a barrier to new entrants by reducing their flow of inbound calls, making the larger incumbents even more attractive to consumers and creating a significant barrier to entry and expansion for smaller networks.

“NZ Communications considers that regulation is absolutely necessary to facilitate competition and we encourage the Commerce Commission to reach conclusion on the matter in as short a time as possible,” said Mr McCabe.

Note for Editors:

NZ Communications is a privately owned New Zealand company building a third mobile phone network for New Zealanders, so Kiwis will have real choice and true competition in the mobile telephone market.

Twenty percent of NZ Communications is owned by Maori interests via the Hautaki Trust. The company’s other major shareholders are General Enterprise Management Services International Ltd (GEMS), Communication Venture Partners and Trilogy International Partners. Together this group of specialist investors provide extensive international telecommunications start-up experience and resources to ensure that NZ Communications has the investment and expertise it needs to successfully establish New Zealand’s third mobile network in 2009.

ENDS

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