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Topic # 73825 23-Dec-2010 08:40 Send private message

Just received:


The Commerce Commission issued its preliminary views today on the regulation of calls and texts to mobile networks, known as the mobile termination access services. 

The Commission’s view is that wholesale price for voice calls to a mobile network should be set at a cost-based benchmark, starting at a rate of 4.6 cents per minute.

“The Commission recognises that this represents a substantial immediate reduction in the termination rate for voice calls, but believes that this is justified because of the unique market conditions in New Zealand, and is necessary to remove a significant, long-standing and growing barrier to efficient expansion by a small mobile network operator. The removal of this barrier will promote vigorous competition for the long-term benefit of consumers,” said Dr Ross Patterson, Telecommunications Commissioner. 

For text the Commission has adopted a bill and keep (zero charge) approach, in recognition of the fact that the cost of terminating text is low and inter-carrier traffic is fairly balanced.

The Commission will now seek submissions and cross-submissions on the draft determinations. Following submissions, the Commission will hold a conference with interested parties before releasing a final determination in March 2011. 

The Commission’s draft determination can be found on the Commission’s website under www.comcom.govt.nz/mobile-termination-access-services-std 

Background
Bill and keep. The OECD definition is “A pricing scheme for the two-way interconnection of two networks under which the reciprocal call termination charge is zero –that is, each network agrees to terminate calls from the other network at no charge.” This means that telecommunications networks recover their costs only from their own customers rather than from their competitors.

Timeline
On 4 August 2010 the Minister for Communications and Information Technology, Steven Joyce, announced that he had accepted the Commission’s recommendation to amend the Telecommunications Act 2001 to allow the regulation of mobile termination access services.The mobile termination access services were added to Schedule 1 of the Act as a result of the Telecommunications (Mobile Termination Access Services) Order 2010, which came into effect on 24 September 2010.

Subpart 2A of Part 2 of the Act specifies the process the Commission is required to follow in making a standard terms determination, which sets the terms on which a designated access or specified service must be supplied with reference to all access seekers and access providers of the service.

The draft determination released today sets out both the price and non-price terms for the services.

The non-price terms reflect the standard terms proposal submitted by Vodafone in November 2011 and submissions and cross-submissions made by telecommunications industry participants. 

Final standard terms determination to be released 31 March 2011





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  Reply # 420821 23-Dec-2010 08:46

This looks like a very intelligent way forward.

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  Reply # 420826 23-Dec-2010 08:52 Send private message

Well at least that will deal with that textme race junk, and perhaps mean vodafone might finally offer people an off network texting package. But I doubt the latter since that is all that is keeping cliques of cheap Auckland kids on their network.

What will that make the markup on a standard prepay voice call now? My maths skills arn't the best at numbers that large ;)




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  Reply # 420839 23-Dec-2010 09:14 Send private message

Sounds good... hopefully this leads to lower prices

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  Reply # 420842 23-Dec-2010 09:20 Send private message

The offering doesn't seem to differ significantly from the deal the Commerce Commission accepted a year ago - except for voice calls being cheaper from 2011 onwards and pure BAK for SMS rather than a hybrid system.

By ~2014-2015 both would have offered very similar pricing.

ajw

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  Reply # 420859 23-Dec-2010 09:35 Send private message

Could be 0.5P in the UK by December 2012.

Ofcom’s Final Decision: What’s going to happen in 2011?

Posted: 20 Dec 2010 06:49 AM PST


As we are rapidly approaching the end of the year, I wanted to update you on the timings around Ofcom’s final decision, currently expected in February 2011. Since the consultation closed in June this year, things have been quieter for the campaign as Ofcom has been away considering all the evidence it received during the consultation in order to make a judgment as to whether or not it will turn its proposal into a final decision.

To recap: On 1st April 2010, Ofcom announced a proposal to reduce MTRs from April 2011. The drop in MTRs will take place over a period of 4 years, coming down to 2.5p in April 2011, 1.5p in April 2012, 0.9p in April 2013 and eventually arriving at 0.5p in April 2014. The proposal means that consumers will have to wait until 2014 to experience the full benefit of lower termination rates. In comparison, the European Commission wants MTRs to fall to 0.5p by the end of 2012.

We hope that Ofcom will confirm the plans laid out in the proposal – or better – and not buckle under pressure from the ‘big three’ operators. They, unlike Three and BT, love high MTRs as they bring in a huge amount of revenue as well as prevent competitive pressure from lower prices.

In the run up to the announcement, please do continue to check the blog for further information. We will be communicating with all of you that signed the petition and asked for more information as soon as we have any updates.

In the meantime, I would like to thank you once again for supporting the campaign. We now have over 161,000 signatories from UK consumers to the petition and we will continue to grow until the changes we want are implemented.

On behalf of the team, I would like to wish you all a Merry Christmas and Happy New Year!


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  Reply # 421233 24-Dec-2010 08:37 Send private message

BaK should have an interesting effect on the ASP market.  They won't need to have a connection to each carrier to deliver SMS's cheaply anymore.




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  Reply # 421242 24-Dec-2010 08:55 Send private message

jpollock: BaK should have an interesting effect on the ASP market.  They won't need to have a connection to each carrier to deliver SMS's cheaply anymore.


This only applies to the fees telcos charge each other, not retail pricing.

Generally speaking telcos in NZ don't transit premium SMS to or from each other, only person to person traffic. Transit is where the MTR is charged. Therefore I would not expect much if any impact on ASP pricing - MTRs don't factor into it.




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  Reply # 421246 24-Dec-2010 09:07 Send private message

It would be nice to see lower call costs in NZ.
My only concern with this is that the carriers will be forced to lower their calling cost and SMS but I'm sure they'll make it up somewhere else like data cost.. Maybe forced data accounts if you have a smart fone as they do in the US these days..




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  Reply # 421250 24-Dec-2010 09:15 Send private message

SaltyNZ:
jpollock: BaK should have an interesting effect on the ASP market.  They won't need to have a connection to each carrier to deliver SMS's cheaply anymore.


This only applies to the fees telcos charge each other, not retail pricing.

Generally speaking telcos in NZ don't transit premium SMS to or from each other, only person to person traffic. Transit is where the MTR is charged. Therefore I would not expect much if any impact on ASP pricing - MTRs don't factor into it.


Yes, they don't currently transit premium SMS because it would be expensive to the carrier, who would pass that charge on to the ASP.  Prior to SMS becoming BaK, off-net ASP traffic would have moved traffic flows out of balance, and thus attracted termination fees.  As long as local ASP connections were cheaper than the termination fees, there was a large incentive to have local connections.

However, under a BaK model, there is no reason that a carrier cannot turn around to ASPs and say, "You know what, I'll deliver all your traffic to the other two carriers."  The carrier no longer has any concern about attracting termination fees, and can therefore price off-net SMS the same as on-net SMS for ASPs.

The only remaining benefits to having a connection to each carrier is to get your short code routed, and the ability to charge your subscribers.  If you don't care about short codes (or charging through a bill), it doesn't matter which carrier you're on.  Heck, you could even keep low-traffic local connections for subscription and billing, while routing most of your traffic from off-net.

Consumer SMS traffic will remain largely symmetrical - you get an SMS, you send an SMS.  It's ASP and M2M traffic which will move around.

Good for 2Degrees, they're most likely to win out of this.




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  Reply # 421253 24-Dec-2010 09:20 Send private message

jpollock:
Yes, they don't currently transit premium SMS because it would be expensive to the carrier, who would pass that charge on to the ASP. 


No, we don't transit premium traffic because we simply all agree not to.

But you're right - now that transit fees are no longer a factor, we *could* in theory all go back and renegotiate our interconnect agreements, if we wanted to. I can't see that happening any time soon though, since it's a lot of work for all three of us for relatively little return. And it only works if all three carriers agree; if one says no, then the providers would still need at least 2 connections - one to the naysayer and one to one of the other two.




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  Reply # 421259 24-Dec-2010 09:43 Send private message

I wonder if this issue is going to be over taken by data/sip/email?

Will 2Deg simply compete in it's onnet area by providing QoS for SIP and then promoting the use of data?

With 300,000 Androids being sold a day around the world, will we see data applications take over traditional voice and sms applications this year?

I suspect that sending an email via gmail with just a subject line (aka a txt) will quickly become faster and cheaper than txt if it's not already.

With my sipdroid sip client I'm not tied to any layer 1/2/3 provider. I'm using a 'local' (and I used that term very loosely) number which means that there are no 'mobile' termination fees and once I educate all my regular contacts about what I'm doing and why, they can play the game as well and we'll all just bypass the termination fees altogether.

D




Promote New Zealand - Get yourself a .kiwi.nz domain name!!!

Check out mine - i.am.a.can.do.kiwi.nz - [email protected]


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  Reply # 421264 24-Dec-2010 09:56 Send private message

DonGould: I wonder if this issue is going to be over taken by data/sip/email?

D


I wouldn't expect it to go away completely. Data is only "cheap" because it is heavily cross-subsidised with traditional voice & text revenues. For example, you'll notice that getting naked DSL is not $45/month cheaper than getting a landline and DSL. That's because a good chunk of that $45 goes towards the cost of the DSL as well.

The faster old-style circuit-switched revenues decline, the slower data costs will come down as more and more of the actual cost of data is directly allotted to the data service itself instead of hidden in the circuit-switched costs.

Nothing is free; data is no exception.




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  Reply # 421267 24-Dec-2010 09:58 Send private message

SaltyNZ:
jpollock:
Yes, they don't currently transit premium SMS because it would be expensive to the carrier, who would pass that charge on to the ASP. 


No, we don't transit premium traffic because we simply all agree not to.

But you're right - now that transit fees are no longer a factor, we *could* in theory all go back and renegotiate our interconnect agreements, if we wanted to. I can't see that happening any time soon though, since it's a lot of work for all three of us for relatively little return. And it only works if all three carriers agree; if one says no, then the providers would still need at least 2 connections - one to the naysayer and one to one of the other two.


What do the interconnect agreements state?  I thought they said, "X/SMS, but if the rates are symmetrical, no charge".  So, since X/SMS is now regulated and set to 0, that would mean that the symmetrical part doesn't enter into it anymore?

/me starts googling...

I couldn't find the TNZ interconnection agreements, but I thought they had to be published?  MED seems to say so (as of 2001), but perhaps the law has changed?

http://www.med.govt.nz/templates/MultipageDocumentPage____4851.aspx#P665_50788

53. Copies of Telecom's interconnection agreements are required to be made publicly available on Telecom's website under the Telecommunications (Information Disclosure) Regulations 1999.


Found the NZComm submission about BaK, ah, it looks like they keep talking about "Mobile-to-Mobile".  

So, Bah! :)

I wonder if there's a price collusion argument to be made in there...

Jason




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  Reply # 421276 24-Dec-2010 10:09 Send private message

jpollock:
What do the interconnect agreements state? 


Not something I can discuss in detail, sorry. But trust me, MTRs going to BaK will not make a material difference to premium or bulk SMS services.





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  Reply # 421317 24-Dec-2010 12:54 Send private message

sms going to BaK mean two degrees won't be able to do the texmerace anymore, however it does mean they can probably offer unlimited anynet text plans at very low cost. (depending on their roaming agreement they recently made with vodafone which they are keeping very quiet)

it will be interesting to see whether 2D passes through the reduction in MTR on voice, or whether their pricing already reflects the assumption that they would get MTRs down.

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