Vodafone's response to the Commerce Commission's report

, posted: 16-Jun-2010 11:49

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.

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?



Author's note by jointhedebate, on 18-Jun-2010 08:32

Not sure why you think this is just Paul, but...

Undertakings offer similar to or better rates than the Commission's own model.

BAK for TXT is better than the Commission has the ability to offer.

Voice rates include a glidepath yes, because that's a better way of managing the decline in revenue (even the European regulator recognises that).

As for the price of certain plans, well that's a whole different issue. New Zealand is a country of 4 million people, not 60 million. Start from there and work back to how many units we're likely to sell and the deal we're likely to get on those phones and you'll see why we price things the way we do.

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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

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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...

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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...

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