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Topic # 62861 16-Jun-2010 09:29 Send private message

Just received:


In its reconsideration report issued today, the Commerce Commission has recommended under the Telecommunications Act that the Minister for Communications and Information Technology regulate mobile termination access services (MTAS), and not accept undertakings from Telecom and Vodafone.

“The Commission considers that cost-based mobile termination rates, when compared to the offers in the undertakings, will better promote competition in the mobile market and will be in the best long-term interests of end-users,” said Dr Ross Patterson, Telecommunications Commissioner.

“While a plan like Vodafone’s Talk Add-on, which has now been withdrawn, might provide short term benefits to consumers on larger networks, in the Commission’s view, such plans are likely to result in longer term detrimental effects on competition in the mobile services market,” said Dr Ross Patterson. “In the long term, the Commission expects that its recommendation of regulation will ensure that all mobile users will benefit from greater competition, which is expected to result in access to more competitive prices and services.”

“For the first time, retail plans such as Talk Add-on introduced a low on-net tariff to a very broad customer base of a large existing network. Faced with such plans, a small entrant paying the wholesale mobile termination rates contained in the undertakings would be likely to incur significant losses and therefore be unable to compete against the large networks,” said Dr Patterson.
As the report is now with the Minister, the Commission will be making no further comment.

The Commission’s final reconsideration report and associated documents are all available on the Commission’s website at www.comcom.govt.nz/mobiletomobiletermination

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 (the Act), 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.

Reconsideration of Commission’s recommendations. Under clause 6(2)(b) of Schedule 3 of the Act, the Minister can require the Commission to reconsider its recommendation or any aspect of its recommendation, for any reasons specified by the Minister.

MTAS investigation. On 6 November 2008 the Commerce Commission commenced an investigation under Schedule 3 of the Act 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.

On 22 February 2010 the Commission recommended that the Minister accept undertakings from Telecom and Vodafone as an alternative to regulation. In that recommendation the Telecommunications Commissioner and Associate Commissioner Pickering considered that the competition concerns that had been identified at that time would be addressed by Telecom and Vodafone’s undertakings, while Commissioner Mazzoleni did not agree with that view.

In April 2010 Vodafone launched a new Talk Add-on product offering up to 200 minutes to Vodafone New Zealand mobiles and landlines for $12 a month for certain pre-pay plans. This plan is promoted on Vodafone’s website as “just 6 cents a minute to Vodafone NZ mobiles and landlines in New Zealand”. This product has subsequently been withdrawn by Vodafone.

In April 2010, the Commission invited the Minister to take account of this new Vodafone product, Talk Add-on, in his assessment of whether Telecom’s and Vodafone’s final undertakings should be accepted, or whether it was appropriate to request the Commission to reconsider its recommendation in light of the potential impact of Vodafone’s new Talk Add-on product.

On 26 April 2010, the Minister requested that the Commission reconsider its earlier recommendation that Telecom and Vodafone’s final undertakings should be accepted. The Minister requested that the Commission consider the implications, if any, of any relevant retail offers on the Commission’s recommendation that the Minister accept the undertakings put forward by Telecom and Vodafone. Retail offers considered are those that have been released since the Commission sent its report to the Minister on 22 February 2010, or that were released before the Commission finalised its reconsidered recommendation.

On 27 April 2010 the Commission announced its process for reconsidering its recommendation   following a request from the Minister for Communications and Information Technology under the Telecommunications Act 2001.

On 12 May 2010, the Commission released its draft reconsideration report and asked for submissions and cross-submission on the draft report. Nine submissions and five cross submissions were received.

The reconsideration focused on the Commission’s recommendation in the Recommendations and Reasons section of the Final MTAS Report issued in February 2010, and all considerations required under the Act. Other sections of the Final MTAS Report, including findings on market definition, the benchmark set, the factual and counter-factuals and qualitative and quantitative analysis were not the subject of the reconsideration.

If the Minister, following any consultation process he undertakes, accepts the Commission’s recommendation, then Schedule 1 of the Telecommunications Act will need to be amended to include mobile termination access services. The Commission is likely to then commence a standard terms determination process for the MTAS and, if so, expects that this process could be completed in a timely manner.





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BDFL
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  Reply # 342206 16-Jun-2010 09:54 Send private message

And an update:


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

Following a request by the Minister to reconsider its initial final report of 22 February 2010, the Commerce Commission this morning delivered its reconsidered final report on mobile termination access services.  It recommended that the termination of voice calls and text messages on New Zealand’s mobile networks be regulated.

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 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.

"I would like to thank the Commission for its hard work in preparing its report," says Mr Joyce.

"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 # 342231 16-Jun-2010 10:56

Vodafone's response:

Vodafone is of course disappointed with the Commission?s reconsideration report. Undertakings have been part of the Telco Act since 2006 but the Commission has yet to accept any commercial offers from the industry.

The Undertakings generate lower termination rates sooner than regulation, with price cuts from October this year rather than at the end of yet another long period of debate.

2degrees is not having any trouble competing, so the Commission's efforts to protect it, whilst theoretically elegant are completely unnecessary from a practical point of view.

The difference between the regulated rate and the Undertakings is likely to be minimal at best ? perhaps two or three cents per minute better for voice and almost no difference for TXT.

Is it worth delaying the introduction of these rates for another year while the Commission decides on its theoretical model?

Vodafone will continue to make the case for the Undertakings as they offer better value, sooner. The Minister will have to consider whether now is the right time to further expand regulation without a solid basis for intervention.




Paul Brislen
Head of Corporate Communications
Vodafone

http://forum.vodafone.co.nz




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  Reply # 342232 16-Jun-2010 10:56 Send private message

Vodafone statement on this decision:


Vodafone is of course disappointed with the Commission’s reconsideration report. Undertakings have been part of the Telco Act since 2006 but the Commission has yet to accept any commercial offers from the industry.

The Undertakings generate lower termination rates sooner than regulation, with price cuts from October this year rather than at the end of yet another long period of debate. 2degrees is not having any trouble competing, so the Commission's efforts to protect it, whilst theoretically elegant are completely unnecessary from a practical point of view.

The difference between the regulated rate and the Undertakings is likely to be minimal at best – perhaps two or three cents per minute better for voice and almost no difference for TXT. Is it worth delaying the introduction of these rates for another year while the Commission decides on its theoretical model?

Vodafone will continue to make the case for the Undertakings as they offer better value, sooner. The Minister will have to consider whether now is the right time to further expand regulation without a solid basis for intervention.






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  Reply # 342233 16-Jun-2010 10:57 Send private message

Damn, Paul beat me to it by split second...




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  Reply # 342234 16-Jun-2010 10:58

Glad to win something today... ;-)




Paul Brislen
Head of Corporate Communications
Vodafone

http://forum.vodafone.co.nz


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Ultimate Geek


  Reply # 342240 16-Jun-2010 11:09 Send private message

<simplistic view>

I believe that the best way to proceed is the exact opposite of the approach Telecom & Vodafone proclaim is the best.

Do you really think that they have their customers best interests at heart? No, of course they dont. They are, after all, businesses that need to deliver dividends to shareholders.

The customers stand to gain from regulation and VF/TC stand to lose....that is why they oppose this decision by the Commerce Commision.

</simplistic view>




.....c'mon sucker lick my battery........
binary solo...0000110000110000111...

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  Reply # 342261 16-Jun-2010 11:40 Send private message

according to stuff.co.nz (http://www.stuff.co.nz/business/3807058/More-cash-for-2degrees)

2degrees is estimated to have lost at least $50m in its March year, on revenues of $15m to $20m.

I'm not sure what Paul is talking about, sure 2degrees are competing but they are not making money out of it. I hope this decision is everything 2dgrees wanted and wish them all the best.

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  Reply # 342265 16-Jun-2010 11:42 Send private message

Glad to see that this is putting some pressure on the industry.
It's going to be well received. Glad to see Vodafone isn't happy about it! :)



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  Reply # 342712 17-Jun-2010 16:13 Send private message

And the expected response from the Drop the Rate Mate campaign:


MEDIA RELEASE
Thursday 17 June
HISTORIC DAY FOR CONSUMERS, SAYS DROP THE RATE, MATE!
 
The members of the Drop the Rate, Mate! campaign are celebrating an historic win for consumers, as the Commerce Commission delivers its recommendation to regulate mobile termination rates to the Minister.

Campaign spokesperson Suzanne Chetwin of Consumer NZ, said that the decision was a win for every New Zealander.  "There are more than four million cellphones used in New Zealand, and every user is going to see the benefits of cheaper costs and better services as a result of this regulation."

The final step in the two-year investigation process is for Steven Joyce, Communications and IT Minister, to decide whether or not to accept the Commission's recommendation.

"We are confident that Mr Joyce will do the right thing by consumers.  There is no longer any doubt that high MTRs are harmful, and regulation is the right move.  This will be the easiest decision Minister Joyce has to make this year, and let's hope he does so quickly."

The members of Drop the Rate, Mate! also expressed their appreciation for the support of the more than 13,000 Kiwis who had signed up to the campaign via www.droptherate.org.nz.

"The loudest voice in this debate has been that of the public.  Without Kiwis voicing their frustration with the status quo, we may never have achieved this outcome."

Drop the Rate, Mate! was founded in August 2009 by Airnet NZ Ltd, Consumer NZ, Federated Farmers, the Federation of Maori Authorities, the New Zealand Union of Students Associations, the Telecommunications Users Association of New Zealand, 2degrees and the Unite union.








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