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Topic # 76911 8-Feb-2011 17:00 Send private message

Just received:


Mobile regulation – who will win and who will lose?

Vodafone New Zealand today tabled a new proposal to help ensure that regulated reductions in wholesale mobile termination rates translate into savings for consumers.

In its submission, released by the Commerce Commission, Vodafone says the most likely outcome of the Commission’s draft proposal for regulation is that fixed operators will benefit from lower wholesale mobile termination costs, and mobile operators will lose significant revenue, with customer benefits left very uncertain.

“With the current proposal the winners are likely to be fixed operators with a huge transfer of wealth from the mobile market into the fixed,” says Hayden Glass, Vodafone’s General Manager of Public Policy.

“The real issue is ensuring that customers will actually benefit when mobile termination rates come down. There is no guarantee that Telecom or other fixed-line operators will reduce their retail prices when MTRs are cut. The Commission’s current proposal risks harming the mobile sector and generating little for customers.”

In its submission Vodafone proposes an alternative approach which it believes ensures a higher level of certainty around consumer benefits.

Vodafone’s proposal includes:
Cutting mobile-to-mobile and SMS termination rates to cost immediately the regulation comes into effect.
Reducing fixed-to-mobile termination rates more gradually down to cost on a three year glide path in line with standard regulatory practice internationally. 
Commission monitoring of retail fixed-line pricing as fixed-to-mobile termination rates come down to ensure that price reductions are actually getting through to customers.

“This deals with the Commission’s key concern which has been to reduce mobile-to-mobile termination rates to cost to help a new mobile entrant like 2degrees compete with other mobile operators,” says Mr Glass. 

“Our approach also addresses the risk of simply transferring wealth from mobile operators (Vodafone and 2degrees) to fixed operators (Telecom, TelstraClear and others) and allows the Commission to monitor whether or not consumers are getting the benefits of reduced MTRs.  If they are then rate drops continue, if not then they can be stopped and reviewed.”

Mr Glass says this approach continues to support mobile sector growth and investment, including by 2degrees.

He says that one cent per minute rate proposed for SMS is a pragmatic solution that allows the Commission to test the impacts of regulation without risking market damage.   One cent SMS interconnection would amount to an 89% reduction from prevailing rates, and would be the lowest regulated rate in the world.

“Zero priced SMS interconnection, so called ‘Pure Bill and Keep’, risks encouraging SMS spam.  Maintaining a cost for SMS, even something as low as one cent, will help protect against spam. 

“France trialled Pure Bill and Keep in 2004 and it did not work.  Arbitrage by spammers drove costs up and annoyed customers.  The French regulator intervened and reversed this arrangement to cost-based regulation.”

Mr Glass says Vodafone believes the approach outlined in its submission is much more likely to deliver real benefits to customers.



 




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ajw

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  Reply # 436894 8-Feb-2011 17:16 Send private message

Same old tired arguments from Vodafone. Yawn.

[Moderator edit (MF): no need to quote the whole OP, being first reply and all]

 




aw

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  Reply # 436895 8-Feb-2011 17:22 Send private message

it would be interesting to hear why you disagree with these arguments, rather than simply dismissing them.

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  Reply # 436897 8-Feb-2011 17:25 Send private message

The arguments really do sound like "it's not fair, now Telecom will get more profit as they have a fixed line service...."
There was also a token comment re. the benefit to the customers not being as good as it could. Where has this concern been up to now...?




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  Reply # 436903 8-Feb-2011 17:38 Send private message

I really hope this means that we will get cheaper calling




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  Reply # 436912 8-Feb-2011 18:17 Send private message

yawn...

I'm with you ajw. This is an issue that the minister should spend no time on at all and let the market sort out.

Regulation of termination costs is not needed any more.

The only thing that is needed from the government is some public education about how to drive the best value out of your mobile company.

1. Texting.

I don't use it. I use email or skype. 1000 texts for $10, get off. I'm happy to pay 20cents to get to the few ppl I can't currently email to their phone.

2. Calling

SIPDroid, while not running well on my 8150, does work and I can use Skype voice as well.

If consumers want to save a few dollars on calls then they need to spend just a little more and get an Android phone and bypass all the silly termination fees or just shut up and pay what ever the mobile and fixed guys ask.

As for Mr Glass, get your hand off it. If you want to drive prices down then drop your termination fee and open up a peered sip gateway that anyone can use to access your network so I can call your phones for the cost of the internet data into your network and your customers can call me for what ever you choose to charge them.

D




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  Reply # 436914 8-Feb-2011 18:22 Send private message

It is pathetic that this issue has dragged on since 1993. Hopefully by the end of march this year we will have some binding long term regulation. I note Ofcom in the UK will be making a decision any day now on MTR's.




aw

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  Reply # 436917 8-Feb-2011 18:28 Send private message

In 1993 we did need some regulation for consumer interests.

Today we really don't need regulation as mobile 'phones' (and I use that term lightly) can use any number of technical solutions to bypass all the crap if the consumer simply puts just a fraction of effort in.

I don't see why there should be any regulation on this issue in the current free market.

Can someone explain why we actually need regulation on this issue?





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  Reply # 436918 8-Feb-2011 18:28 Send private message

MikeSkyrme: The arguments really do sound like "it's not fair, now Telecom will get more profit as they have a fixed line service...."
There was also a token comment re. the benefit to the customers not being as good as it could. Where has this concern been up to now...?


And it's a perfectly valid concern. The reason the issue keeps being raised is because it's exactly what has happened in numerous foreign markets. Telstra for example have loved enforced lower MTRs in Aussie - the money they've lost from mobile has been made up by their fixed line business which didn't slash their pricing.

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  Reply # 436922 8-Feb-2011 18:41 Send private message

Steve can you explain how that works please?




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  Reply # 436923 8-Feb-2011 18:43 Send private message

SBiddle:
Understood.
However, Vodafone have not only just arrived on the scene in NZ and have been present in these numerous foreign markets for longer still.
Having seen what has happened elsewhere, what moves did they make to demonstrate that they are trying to give the customer the best deal? Er, not much. Did they therefore realise regulation was inevitable? Er, yes. Did their entrance into the NZ mobile market bring about huge benefits for the consumer by way of competition? Maybe.
This is not an anti-Vodafone tirade, Telecom are also in the same boat.
Had both Vodafone and Telecom demonstrated a commitment to lowering these costs, maybe regulation would have been avoided?
I like to see the Govt's POV here, they have a public screaming for action and are fairly limited in what available actions they have to utilise. I am not saying regulation is the way to fix what are some pretty high rates, I wouldn't have a clue where to start.




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  Reply # 436925 8-Feb-2011 18:48 Send private message

ahmad: Steve can you explain how that works please?



Day 1:  T.au fixed line customer pays $1/min, to call Optus mobile of which 25cents is a hand over fee...

Day 2: Govt changes hand over fee to 10cents

Day 2:  T.au fixed line customer pays $1/m to call Optus mobile of which 10cents is hand over fee...

Telstra pocket the 15c diff and don't pass it on to fixed line customer. 




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  Reply # 436926 8-Feb-2011 18:48 Send private message

ahmad: Steve can you explain how that works please?


Quite simply fixed line carriers don't drop prices and absorb MTR increases. Why does it still cost 63c to call a mobile phone from Telecom? It cost 71c in the early when the network was launched and MTR rates were ~50c per minute, and dropped to 63c around 3 years ago despite the MTR cost having dropped from ~50c to ~17c in that time.



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  Reply # 436927 8-Feb-2011 18:51 Send private message

MikeSkyrme: SBiddle:
Understood.
However, Vodafone have not only just arrived on the scene in NZ and have been present in these numerous foreign markets for longer still.
Having seen what has happened elsewhere, what moves did they make to demonstrate that they are trying to give the customer the best deal? Er, not much. Did they therefore realise regulation was inevitable? Er, yes. Did their entrance into the NZ mobile market bring about huge benefits for the consumer by way of competition? Maybe.
This is not an anti-Vodafone tirade, Telecom are also in the same boat.
Had both Vodafone and Telecom demonstrated a commitment to lowering these costs, maybe regulation would have been avoided?
I like to see the Govt's POV here, they have a public screaming for action and are fairly limited in what available actions they have to utilise. I am not saying regulation is the way to fix what are some pretty high rates, I wouldn't have a clue where to start.


I'm confused here if you're meaning wholesale or retail rates. MTR costs have been dropping in NZ constantly over the years. You also have to remember there is no link that can be established anywhere in the world between MTR costs and the cost of calls from mobile phones.

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  Reply # 436929 8-Feb-2011 18:51 Send private message

Aha....

Maybe further regulation, to include the fixed line carriers, is the answer.........Tongue out




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  Reply # 436933 8-Feb-2011 19:01 Send private message

sbiddle:
MikeSkyrme: SBiddle:
Understood.
However, Vodafone have not only just arrived on the scene in NZ and have been present in these numerous foreign markets for longer still.
Having seen what has happened elsewhere, what moves did they make to demonstrate that they are trying to give the customer the best deal? Er, not much. Did they therefore realise regulation was inevitable? Er, yes. Did their entrance into the NZ mobile market bring about huge benefits for the consumer by way of competition? Maybe.
This is not an anti-Vodafone tirade, Telecom are also in the same boat.
Had both Vodafone and Telecom demonstrated a commitment to lowering these costs, maybe regulation would have been avoided?
I like to see the Govt's POV here, they have a public screaming for action and are fairly limited in what available actions they have to utilise. I am not saying regulation is the way to fix what are some pretty high rates, I wouldn't have a clue where to start.


I'm confused here if you're meaning wholesale or retail rates. MTR costs have been dropping in NZ constantly over the years. You also have to remember there is no link that can be established anywhere in the world between MTR costs and the cost of calls from mobile phones.


Should cheaper wholesale rates not transfer directly to the consumer anyway?
I understand the current regulation is about opening up pathways to fair competition (at least I think that is the intent?), but the competition must surely be good for the end user of the products?




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