Commerce Commission to commence mobile roaming investigation

Release no 151, Issued 30 June 2009

The Commerce Commission has today announced that it intends to commence a Schedule 3 investigation into whether regulation of the national mobile roaming service should be extended to include price.

This announcement coincides with today’s release of the Commission’s draft report on its investigation into mobile termination access services. In the past, the Commission has used mobile termination rates as a proxy for mobile roaming rates. In light of the Commission’s benchmarking contained in its mobile termination report, the Commission considers that the prices contained in current commercial roaming agreements may be significantly above cost.

The Commission also has a number of other concerns regarding national roaming, and the mobile market in general, which suggest that an investigation may be appropriate. These concerns include the ability of future potential market entrants to negotiate competitive agreements in a timely manner.

Accordingly, the Commission considers that there are reasonable grounds to commence a national roaming investigation.

“National roaming and mobile termination are distinct but related services in the sense that very similar network elements are used to provide these two services,” said Commissioner Anita Mazzoleni. “Due to this relationship, the Commission’s benchmarking for mobile termination is likely to inform its view on an appropriate price for national roaming in any Schedule 3 investigation.”

Given the inter-relationship between the Commission’s current mobile termination investigation and the national roaming service, the Commission intends to move quickly to align these two processes.

The Commission plans to commence an investigation into national roaming in August, with a view to releasing a draft report in mid October and completing the investigation by the end of February 2010. The Commission however notes that parties still have an opportunity to reach acceptable commercial solutions at any time, including before the Commission formally commences the investigation.

Background

National roaming allows subscribers of one mobile network (home network) to use their mobile telephone handset on a different mobile network (visited network) to make and receive calls. It allows a new entrant to offer nationwide services while it builds its own network.

MTAS Investigation. On 6 November 2008 the Commerce Commission commenced an investigation under Schedule 3 of the Telecommunications Act 2001 into mobile termination access services (MTAS). The investigation incorporates mobile-to-mobile voice termination (MTM), fixed-to-mobile voice termination (FTM) and short-message service termination (SMS). The investigation is to consider whether these services should become regulated services under Schedule 1 of the Act.

Schedule 3 of the Telecommunications Act. Under Schedule 3, the Commission can commence an investigation into whether or not the list of regulated telecommunications services contained in Schedule 1 of the Act should be amended by adding a new service, omitting a service, or amending the terms of an existing service, including whether a specified telecommunications service should become a designated telecommunications service (ie, become a service where the terms and conditions including price can be set by the Commission). The Commission then makes a recommendation based on its investigation to the Minister of Communications and Information Technology.

A regulated service under Schedule 1 of the Telecommunications Act can be either a designated service, where the terms and conditions including price of the service can be set by the Commission, or a specified service where the Commission can set non-price terms and conditions only.

On 16 November 2006, the Commission commenced its previous investigation into whether to amend the terms of the roaming services under Schedule 3 of the Telecommunications Act 2001.

On 10 March 2008, the Commission issued its final recommendation to the Minister for Communications and Information Technology on the regulation of mobile roaming. The Commission recommended that the mobile roaming service not be designated, which means that it will not be subject to price regulation. The Commission also recommended that the definition of the service be amended to make it compatible with modern technology. The Minister accepted the Commission’s recommendations, but asked the Commission to consider whether there were grounds to commence a new investigation into the issue in light of new information the Minister had received since the Commission’s recommendations were made.

On 19 September 2008, the Commission replied to the Minister that it did not consider there to be reasonable grounds to commence an investigation based on the information that had been assessed at that time. The Commission informed the Minister that it would engage with interested parties and seek further information to better inform it on whether there are reasonable grounds to commence an investigation.

On 30 March 2009, the Commission informed the industry that it had deferred, for a period of three months, its decision on whether there are reasonable grounds to commence a Schedule 3 investigation into designation of the national roaming service. This was primarily due to the inter-relationship between national roaming and the MTAS investigation.