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.
Other related posts:
Of termination rates and regulatory holidays
Minister recommends regulation - Vodafone's response
Here we go again
Comment by Rhys Smith, on 17-Jun-2010 15:52
Paul, you've got an interesting way with words.
You say that acceptance of the undertakings would give lower rates sooner than regulation. This statement is misleading. The undertaking rates are lower than available currently, and would probably be available sooner than regulation if accepted, however the rates would be quite significantly higher than regulation. A more appropriate statement would be that acceptance of the undertakings will give lower rates than currently available in the market, but which are much higher than regulated rates.
MTAS regulation at TSLRIC will give rates circa 6c per minute (billed per second) in calendar year 2011. In percentage terms, this is a huge difference compared to the rates in the undertakings - the undertakings don't reach this rate until several years later - 2014 or 2015 from memory? For SMS it's looking like 0.77c per SMS - more than a 90% drop from current rates of 9.5c per SMS.
The above rates were benchmarked against cost-based rates in overseas jurisdictions more than 12 months ago. As we know, MTRs are falling from a precipice around the world - current benchmarked rates are likely to be lower again that previously indicated by the Commerce Commission.
In the vast majority of countries where Vodafone operates, MTRs are regulated. The ComCom is not looking to change the world in New Zealand - it is finally looking to conform to international best practice.
Paul - New Zealanders are tired of getting ripped off. It is not just the MTRs that are the problem, it is the horrifically high retail charges and call plans.
Why is it that a medium-use iPhone plan in New Zealand (considered medium use overseas, high-use in NZ) is $250 per month for 600 minutes, 600 SMS and 1GB of data. An equivalent plan in the UK (with unlimited SMS) is 35 pounds (less than NZ$75) per month. Please - wake up to yourselves - more than TRIPLE the price in New Zealand?
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