EU acts to bring down mobile phone charges

BRUSSELS, May 7 (Xinhua) -- European mobile phone users would save at least
two billion euros (2.67 billion U.S. dollars) over the next four years if
operators cut their wholesale charges under a European Commission guidance
adopted on Thursday.

The guidance indicated specifically that termination rates at national
level should be based only on the real costs that an efficient operator incurs
to establish the connection.

Termination rates are the wholesale fees charged by operators to connect
the call from another operator's network which are part of everyone's phone
bill.

Mobile termination rates varied widely in the European Union (EU) in 2008
from 2 euro cents per minute in Cyprus to 15 euro cents per minute in Bulgaria,
averaging at 8.55 euro cents per minute across the EU, and the rates are also
typically 10 times higher than fixed termination rates.

Higher mobile termination rates make it harder for fixed and small mobile
operators to compete with large mobile operators.

The commission suggested that appropriate termination rates should fall
between 1.5 euro cents to 3 euro cents per minute by the end of 2012.

It warned these divergences, and differing regulatory approaches, undermine
the EU single market and Europe's competitiveness.

"This is not in line with the increasing convergence between fixed and
mobile telephony and can lead to serious distortions of competition between
member states and operators," said EU Telecoms Commissioner Viviane Reding.

The commission estimated that eliminating price distortions between phone
operators across the EU will lower consumer prices for voice calls within and
between member states, saving business and household customers at least two
billion euros in 2009-2012, and help investment and innovation in the entire
telecoms sector.

"Bringing down termination rates to an efficient level will increase
competition to the benefit of European consumers," said EU Competition
Commissioner Neelie Kroes.

"Only a rigorous and harmonized approach to regulation will ensure that the
existing distortions of competition are removed in the whole EU and that
innovative new products combining fixed and mobile calls will emerge," she
added.

New Zealand Reserve Bank cuts interest rates to 2.5%

WELLINGTON, April 30 (Xinhua) -- New Zealand's Reserve Bank on Thursday cut the official cash rate (OCR) by half a percentage point to a record low 2.5 percent.

Announcing the decision, Reserve Bank Governor Allan Bollard said he expected the rate to stay at 2.5 percent until the end of next year, but it "could still move modestly lower."

He said the world economy deteriorated further than expected in the first quarter of 2009 and "adverse economic forces" are expected "to remain dominant" throughout 2009.

Bollard said it is likely to be some time before economic activity returns to robust and healthy levels.

Thursday's 50 basis point cut in the OCR was widely expected by economists.

At the start of April, the Reserve Bank had been forced to say longer term interest rates would remain low for a prolonged period, after a rush to refinance home loans at cheap rates caused swap rates to spike.

New Zealand's OCR has been lowered in a series of cuts since July 24, 2008. It was set at 8.25 percent on Sept. 13, 2007. The previous 3 percent rate was set on March 12 2009.

"The timing and extent of global recovery remain highly uncertain," said the central bank governor.

"While the New Zealand economy has not experienced the same extreme falls in economic activity as seen in a number of our trading partners, it remains weak. Business sentiment is low, investment has been curtailed and employment reduced," he said.

The large decline in the OCR during the past year was expected to pass through to more borrowers in coming quarters as existing fixed-rate mortgages came up for re-pricing, Bollard said.

Global financial markets were showing some tentative signs of stabilization but much still needed to be done and sentiment remained fragile, Bollard said.

The New Zealand dollar plunged nearly 1 U.S. cent immediately after the OCR announcement from 57.34 U.S. cents to 56.46 U.S. cents before recovering slightly.