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Topic # 57691 22-Feb-2010 10:12 Send private message

This was announced today:


Recommendation on mobile termination delivered to Minister

Release no 77, Issued 22 February 2010

The Commerce Commission today delivered its final report on mobile termination access services to the Minister for Communications and Information Technology.  The Telecommunications Act requires the Telecommunications Commissioner to make a recommendation to the Minister at the end of an investigation and include the views of two other members of the Commission.

The Telecommunications Commissioner, Dr Ross Patterson, has recommended that the Minister accept Telecom’s and Vodafone’s final undertakings as an alternative to regulation. Associate Commissioner Gowan Pickering’s view agreed with Dr Patterson’s recommendations. Commissioner Anita Mazzoleni’s view is that mobile termination access services should be regulated.

The final report concludes the Commission’s investigation into whether it should recommend to the Minister that mobile termination access services be regulated under the Telecommunications Act or whether commercial undertakings should be accepted as an alternative to regulation.

During the investigation, Telecom and Vodafone offered undertakings that will reduce mobile termination rates over time. Dr Patterson said, “I have concluded that both regulation and acceptance of the final undertakings would address the competition concerns that the Commission identified. In my view, the long-term interest of consumers will best be served by applying the least intrusive means to address the competition concerns identified in the investigation. This will allow market forces to continue to operate in areas outside the scope of intervention.”
 
“The final undertakings from Vodafone and Telecom have offered mobile termination rates that are significantly lower than those offered in earlier undertakings. While these rates remain above the range of the Commission’s cost-based benchmarks, they address the competition concerns identified by the Commission, and my recommendation is that they be accepted by the Minister,” said Dr Patterson.

“Addressing these competition concerns will lead to more competition in mobile markets for the long-term benefit of consumers. This should lead to better prices and services as companies compete to get and retain customers,” said Dr Patterson.

Commissioner Anita Mazzoleni said, “While undertakings will deliver a reduction in mobile termination rates three months earlier than a regulated outcome, the consequence is that mobile termination rates will remain significantly higher than the Commission’s benchmarks during the five-year period of the undertakings and remain higher at the end of the undertaking period. In my view, the barrier arising from the prices in the final undertakings continues to ensure an uneven playing field, and this will impede the benefits competition will otherwise deliver to New Zealand consumers.”

As the report is now with the Minister, the Commission will be making no further comment.

The Commission’s final report, the undertakings and the submissions received to date are all available on the Commission’s website www.comcom.govt.nz under Industry Regulation/Telecommunications/Investigations/Mobile Termination Access Services

Background

Mobile termination prices are the wholesale charges mobile phone companies charge for terminating calls or texts from other fixed or mobile networks.

Undertakings. Under the Telecommunications Act 2001, parties can submit undertakings, which are an offer of terms and conditions for the supply of a service as an alternative to regulation.

Requirements of the Telecommunications Act. The Act requires that the Commission makes a recommendation which best promotes competition for the long-term benefit of end-users.

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 MTAS incorporates mobile-to-mobile voice termination (MTM), fixed-to-mobile voice termination (FTM) and short-message service termination (SMS). The investigation considered whether these services should become regulated services under Schedule 1 of the Act.





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  Reply # 300919 22-Feb-2010 10:16 Send private message

And here is an update from the Minister - in other words, a lot more talk still to come...


Minister accepting submissions on mobile termination rates

Communications and Information Technology Minister Steven Joyce today invited submissions on the Commerce Commission’s final report on mobile termination access services.

This morning the Commerce Commission delivered its final report on mobile termination access services.  It recommended, by a majority decision, that the undertakings received from Telecom and Vodafone on the termination of voice calls and text messages on their mobile networks should be accepted.

The Commission did not recommend the regulation of mobile termination access services on the 2degrees network given that 2degrees had withdrawn all previous undertakings.

Under the Telecommunications Act, the Minister may accept, reject, or require the Commerce Commission to reconsider the recommendations.

Before making his decision on the Commission's recommendations the Minister is inviting written submissions:

• On new matters raised in the report; and
• That update comments already made in submissions to the Commission prior to the completion of the MTAS Report.

“While I do not intend to re-open issues that parties have already had the opportunity to raise with the regulator, I am inviting comments on any matters raised in the report that were not, and could not have been, raised in previous submissions to the Commission, and on any relevant information that is not addressed in the Commission’s report,” says Mr Joyce.

“I would like to thank the Commission for its hard work in preparing its report.

“I will make a decision upon consideration of the report, submissions, and advice from officials.  It is my intention to do this in a timely manner.”






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  Reply # 300922 22-Feb-2010 10:23 Send private message

IMO, sanity has prevailed here, and in due course, we should start to see the cost of Fixed-to-Mobile calls come down, probably led by the VoIP providers.

I can already hear a stampede of posters about to arrive, saying no, no, no, Mobile Termination Rates have nothing to do with the retail prices charged to consumers for FTM calls, but that argument doesn't seem to have any logic, given that VoIP providers in NZ have always charged such calls at the underlying cost per minute levied by Telecom or Voda, plus a reasonable margin.

For example, the most competitive FTM offers in the market right now are:

- 2Talk 25c per min. incl. GST
- Telecom Business Time 23c per min. + GST (= 26c per min. incl. GST)
- WxC VFX 30c per min. incl. GST

Look for these to start edging down once the new undertakings take effect.





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  Reply # 300924 22-Feb-2010 10:30 Send private message

grant_k: IMO, sanity has prevailed here, and in due course, we should start to see the cost of Fixed-to-Mobile calls come down, probably led by the VoIP providers.

I can already hear a stampede of posters about to arrive, saying no, no, no, Mobile Termination Rates have nothing to do with the retail prices charged to consumers for FTM calls, but that argument doesn't seem to have any logic, given that VoIP providers in NZ have always charged such calls at the underlying cost per minute levied by Telecom or Voda, plus a reasonable margin.

For example, the most competitive FTM offers in the market right now are:

- 2Talk 25c per min. incl. GST
- Telecom Business Time 23c per min. + GST (= 26c per min. incl. GST)
- WxC VFX 30c per min. incl. GST

Look for these to start edging down once the new undertakings take effect.


It'll be interesting to see whether Telecom drop from their base rate of 63c per minute!


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  Reply # 300925 22-Feb-2010 10:30 Send private message

Thanks @freitasm and @grant_k for those - sometimes its nice to read news like this in english LOL :)




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Stephen
twitter/ NZCoderGuy / KiwiDevStudios

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  Reply # 300963 22-Feb-2010 12:43 Send private message

I see that 2degrees is throwing the toys out of the cot again.

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  Reply # 300966 22-Feb-2010 12:51 Send private message

Behodar: I see that 2degrees is throwing the toys out of the cot again.


I don't see how you have any justification for complaining. 2degrees didn't even have an offering on the table as they threw their toys out of the cot and withdrew all offerings.

It's a bit like complaining about not winning an auction when you had a single bid and then withdrew it.

Those people who thing that the offerings from both Vodafone and Telecom need to read through all the documentatiion on the Commerce Commission site and decide for yourself whether the original proposals by the Commerce Commission and the final submissions from Vodafone and Telecom are close enough. There are pros and cons to both and regulation is not the answer to everything.




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  Reply # 301048 22-Feb-2010 16:22 Send private message

And here is the release from the Drop The Rate campaign (sponsored by Airnet NZ Ltd, Consumer New Zealand, Federated Farmers, the Federation of Maori Authorities, the New Zealand Union of Students Associations, the Telecommunications Users Association, 2degrees and Unite)


TWO COMMERCE COMMISSION MEMBERS DO AN ABOUT-FACE

Two members of the Commerce Commission have done an about-face, after repeated voluntary undertakings from the big telcos - while another, Anita Mazzoleni, has sided with consumers, the Drop the Rate, Mate! campaign said today.

The campaign was commenting on a split 2-1 decision by the Commerce Commission to accept slow "voluntary" reductions in mobile termination rates (MTRs) over the next four years - but even then not to a level which will stimulate true competition and give consumers lower prices in the mobile phone market.

Drop the Rate, Mate! spokesman Matthew Hooton said that the campaign would now focus on encouraging Communications and Information Technology Minister Steven Joyce to accept Ms Mazzoleni's view rather than those of her counterparts.

"The only outcome acceptable to our campaign is the implementation of prices which reflect the cost of connecting a call to a different network rather than being set a level designed solely to prevent proper competition," Mr Hooton said.

"Almost all other countries' competition authorities understand that high MTRs have no justification and are simply barriers to competition, and we will be working to ensure Mr Joyce accepts that point too."

Drop the Rate, Mate! currently has more than 11,000 supporters through its website at www.droptherate.org.nz. It was founded in August 2009 by Airnet NZ Ltd, Consumer New Zealand, Federated Farmers, the Federation of Maori Authorities, the New Zealand Union of Students Associations, the Telecommunications Users Association, 2degrees and the Unite union.

Drop the Rate, Mate! was formed to demand lower mobile termination rates in line with the costs of connecting calls and texts.





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  Reply # 301120 22-Feb-2010 18:21 Send private message

I wonder if the comcom visited the Drop the Rate Mate page (corporate sponsored by 2degrees amongst others) and noted that despite all the publicity only 11,500 people had signed the online petition. It might have influenced them the opposite direction the drop the rate campaign intended.

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  Reply # 301306 23-Feb-2010 03:21 Send private message

2 degrees seem to want all this regulation when it helps them, but lets see them change once they get a proper network and people want decent data pricing etc.




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  Reply # 301615 23-Feb-2010 19:05 Send private message

richms: 2 degrees seem to want all this regulation when it helps them, but lets see them change once they get a proper network and people want decent data pricing etc.


Really, even if this is the case, so what? Every company wants what's best for its bottom line, but what's good for 2 degrees right now, and bad for Telecom or Vodafone, is probably good for consumers (ie 2 degrees is able to become a stronger competitor). Why would anyone listen to what the incumbents have to say regarding competition and prices? What's good for Telecom and Vodafone right now is probably NOT good for consumers.

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  Reply # 301643 23-Feb-2010 20:24 Send private message

yes 2d are coming on their white horse to save us all...

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  Reply # 306157 11-Mar-2010 09:26 Send private message

Maybe not since 2D are, as sbiddle puts it, "throwing their toys" again.

http://www.nzherald.co.nz/technology/news/article.cfm?c_id=5&objectid=10631263

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  Reply # 306163 11-Mar-2010 10:01 Send private message

It's no good trying to argue logic with many of these people.

The reality is we pay too much for mobile calls in NZ. Apart from Vodafone and Telecom virtually everybody agrees with that.

Are MTRs the root cause? The simple answer is NO. I wish those who keep bleating about MTRs like a stuck record could provide conclusive proof that MTR costs are the reason we pay so much. We had a doupoly in the mobile market that had no real incentive to start a pricing war and compete on retail pricing that was the real cause.

MTR costs now represent less than 25% of the cost of an 89c prepay call on Vodafone or Telecom. 10 years ago MTR costs were roughly 50% of an 89c call. They are not the cause of the problem, a lack of competition on the marketplace is the root cause. MTR costs have continued to fall over the years and yet retail pricing has not necessarily followed suit, why does anybody think that cutting MTR costs will instantly result in cheaper calling when it has not occured in the past?

After years of winging about the regulatory environment 2degrees finally did the hard yards and launched a network that by all accounts is doing far better than anybody (including themselves) expected. We finally got competition with 2degrees and guess what. Calling prices dropped! Have MTR rates dropped? No they haven't.

The success of 2degrees could pose the question asking what's actually wrong with the environment right now..

The launch of 2degrees has done wonders for compeitition in NZ and we're now in a position were 25c calling for the average person is now a reality and if you've on a contract and paying more than 25c per minute for calling you are paying too much. The problem however is that people seem happy being ripped off - instead of actually moving operators people just seem happy to complain..

 

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