Recommendation on mobile termination delivered to Minister

, posted: 22-Feb-2010 08:59

This just in from the Commerce Commission... basically it will recommend to the Minster that he accept the Undertakings offered by Telecom and Vodafone.

It's a split decision, but still goes in favour of the Undertakings ahead of direct regulation itself.

The Commission's press release is available in full here.

Quote from Dr Patterson:

“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.


This is Vodafone's release on the announcement:

Vodafone welcomes Commerce Commission recommendation

Vodafone welcomes the Commerce Commission recommendation to accept the industry's commitment to reduce Mobile Termination Rates (MTRs).

The Commission has recommended the Minister of Communications accept the undertakings offered by Telecom and Vodafone in lieu of direct regulation. If the Minister accepts the recommendation the new termination rates will take effect from 1 October, 2010.

Vodafone New Zealand GM of Corporate Affairs Tom Chignell says the outcome is a pragmatic one given the uncertainty around a long regulatory process and whether the savings will end up in consumers’ pockets.

“We have always preferred commercial outcomes to regulation.  New Zealand’s rates are broadly in line with Europe’s rates already  and through this, and the previous investigation, the Commission has managed to elicit massive voluntary reductions in termination rates for voice and SMS.” 

The Minister will now decide whether or not to accept the Commission’s recommendations  and Vodafone urges him to make that decision so we can get on with the business at hand – making sure Vodafone customers have access to the best services on the country’s reliable 3G network.

Other related posts:
Of termination rates and regulatory holidays
Minister recommends regulation - Vodafone's response
Vodafone's response to the Commerce Commission's report

Comment by Chris, on 22-Feb-2010 10:10

Ok, So Paul does this mean that you
will have to start charging for incoming calls/texts or because they accept your offer you wont loose out on more money if they wanted the MTR's cut further????

Author's note by jointhedebate, on 22-Feb-2010 10:17

Our offer includes a glide path for voice calls, which mitigates the immediate "drop off a cliff" impact - something we're keen to avoid for obvious reasons.

But it does mean we will need to review pricing - something we do all the time anyway.



Comment by Chris, on 22-Feb-2010 10:47

Well just give us pricing like at&t have in the us, unlimited mobile to mobile nights and weekends, 500 mins anytime, unlimited texts, unlimited data, $70 per month

Author's note by jointhedebate, on 22-Feb-2010 10:53

Sadly that's not likely... let's remember, unlimited data doesn't mean unlimited in the US... it's restricted.

Also the US has a large population of people who generally only look at US sites so the international data component is trivial and they pay to receive calls and TXTs as well. Take a look at AT&T's prepay contracts before wishing those on anyone here... not pretty at all.

Comment by Chris, on 22-Feb-2010 11:03

Ha, You people were pretty fast to bring up Pay to receive calls/texts. I think it's what. you want us to pay to receive calls like in the US. and minimum monthly top ups. And how the hell can ya have a prepay contract???

Author's note by jointhedebate, on 22-Feb-2010 11:11

That's easy, Chris. Everyone who signs up to a Prepay plan signs up to a contract. You'll notice there are things like how many TXTs and voice minutes etc are included in your contract. It may not have an expiry date, but it's a contractual agreement nonetheless.

As for paying to receive calls and TXTs, we said early on that that kind of regime is the logical outcome of moving everything to bill and keep. It's what happens in BAK regimes around the world (like the US). We aren't moving entirely to BAK so hopefully we will avoid that.

Comment by Chris, on 22-Feb-2010 11:16

And also, why do the commerce commission say that the MTR' rates should be dropped so customers get cheaper calling? we have more competition now, Two Degrees is cheap, So why don't the com com drop the investigation into mtr and just advice people to go over to Two Degrees if they want cheaper calling???

Author's note by jointhedebate, on 22-Feb-2010 11:18

Good question but one I can't answer sorry. You'll need to ask the Com Com.

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Paul Brislen
New Zealand

You’ll have heard about mobile termination rates and how the Commerce Commission is investigating whether or not to regulate them. But what is a mobile termination rate, how does it work and why is it so important?

In this blog, we’ll try to answer your questions, tell you a bit about what we think and keep you up to date with the Commerce Commission and its process.

Recent comments

jointhedebate on Of termination rates and regulatory holidays: @StevenON, it's not MTR that introduces on-net/off-net pricing - it's marketing....

jjero on Of termination rates and regulatory holidays: You quote the amount of people in the public that think there won't be a substan...

grant_k on Of termination rates and regulatory holidays: This spectacle of Vodafone crying over spilt milk makes me about ready to puke.....

SteveON on Of termination rates and regulatory holidays: I spent a little time looking @ VF Ireland and am very surprised at their lack o...

jointhedebate on Of termination rates and regulatory holidays: @langi27 you're not required to read it - this is a place where we wanted to tal...

langi27 on Of termination rates and regulatory holidays: I don't understand why you continue to try to convince the public that your stil...

jointhedebate on Of termination rates and regulatory holidays: @rewa, that's a different kind of termination rate. You pay an early termination...

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