One of the biggest issues affecting Digital Subscriber Line (DSL) broadband is the quality of the copper wiring it is delivered over. The quality of wiring hasn’t caused significant impact in the past with slower first generation ADSL services, but as Chorus along with other providers such as Vodafone, Orcon, and TelstraClear upgrade their networks to support faster ADSL2+ and VDSL2 speeds, wiring quality becomes a major issue.
Overall the quality of the wiring within the Chorus network is typically good, however poor quality wiring in your home or workplace is common, and has the ability to have significant impact on both speeds and the stability of your connection. Many homes have poorly installed wiring or jackpoints, or jackpoints that have suffered corrosion damage over time due to the damp climate in parts of New Zealand. If your home wiring has not been upgraded since the late 1990’s it probably uses older 3 wire jackpoints (with a master and extension unit) which also have the ability that play havoc with DSL signals. Many people have simply blamed their ISP for their speed or stability issues in the past, without understanding that their issues could well be as a result of wiring within the premises.
The SDP is the result of many hours of work spent developing a device that can be installed in a home or business to improve broadband speeds without having to replace all existing wiring within the premises to comply with modern wiring guidelines. The SDP also future proofs the house for a move to Voice Over Internet Protocol (VoIP) based phone services and can also simplify the setup of a home network to PC’s or network devices located in other locations around the house. To really understand why the SDP is so important however, we firstly need to look at the current state of broadband infrastructure in New Zealand.
Right now Chorus are past the halfway mark deploying a Fibre To The Node (FTTN) network in New Zealand consisting of 3600 new roadside cabinets. Previously most DSL based broadband services were provided from phone exchanges that may have been some distance from your home or business. Because the DSL signal degrades the further it has to travel, the further you were located from an exchange, the slower your broadband would be. These new roadside cabinets contain fibre optic cable to link them to the existing exchange, and a piece of equipment known as an Intelligent Service Access Manager (ISAM) or Digital Subscriber Line Access Multiplexer (DSLAM) to deliver your broadband connection directly from the cabinet over the existing copper wiring to your house. By the end of 2011 when this project is complete approximately 80% of New Zealanders will be located within approximately 2km of a phone exchange or roadside cabinet and will have access to broadband connections with a minimum speed of 10Mbps – the vast majority however will find that their speeds are closer to 18Mbps with current ADSL2+ technology, and with the upcoming launch of the VDSL2 technology many could see download speeds in the vicinity of 50Mbps over their existing copper wiring.
While Chorus are upgrading their network, in many cases the broadband speed bottleneck will now be the wiring in your home or business. DSL technologies use frequencies over your copper phone line that are much higher than those used by your normal voice services. To ensure that voice and DSL services can coexist on the same line and do not interfere with each other, filter(s) are required to be installed in your premises to split the two. There are two options available – a professionally installed master filter, or DIY plug in filters that are required for every phone in the home, as as well as other devices plugged into your phone line such as your Sky TV box, fax machine or medical alarm.
Most people choose to use plug in filters because it enables a them to perform a self install of their modem, and avoid the cost of a visit by a technician. Plug in filters are not a the perfect solution however – not only are they cumbersome, but they also don’t eliminate issues such as reflections on the line, nor can they compensate for poor quality wiring, connectors or jackpoints. As I mentioned earlier, damaged wiring or jackpoints, or even the use of older 3 wire jackpoints will cause a significant impact on DSL performance. Installing more than 4 plug in filters on a line can also cause the DSL signal to be degraded. These all have the ability to become a significant bottleneck with faster ADSL2+ and VDSL services which will suffer significant speed degradation or stability issues from any interference caused by your internal wiring.
Poor quality internal house wiring is an issue that is widely known, and is an issue that the industry has strugged to solve. Despite Telecom releasing guidelines in the late 90’s advising that a structured wiring solution be installed in all new homes, many new homes still don’t have one. Around the same time Telecom also advised of a move away from wiring phone jackpoints in a daisy chain configuration, but many electricians and phone installers still continue to this day to install jackpoints in this way. The daisy chain configuration involves connecting jackpoints in a “looped” configuration from one to the other, and causes impedance fluctuations or reflections on the line which in turn impacts on DSL signals, and ultimately broadband speeds.
A professionally installed master filter will split your broadband and voice signals as close as possible to where the cabling enters your house (a location known as the ETP or External Termination Point) and will give you a dedicated jackpoint to plug your DSL modem into. Because the DSL and voice signals are isolated It means that poor quality wiring can’t interfere with the DSL connection and in most cases will deliver faster speeds than what can be obtained using plug in filters. While it’s not possible to put an exact figure on this, for somebody who is connected to new equipment in an exchange or roadside cabinet and already gets good sync speeds (ie in the 12000kbps – 15000kbps range) it could possibly deliver an increase of around 10%. Somebody connected to a new cabinet or exchange who has very poor quality house wiring could see speed increases of several hundred percent. A master filter is certainly recommend for anybody who uses DSL based broadband, and for VDSL services a professionally installed master filter is essential as existing ADSL plug in filters are unsuitable and can’t be used. Uptake of master filters has been low, in part because many people are unwilling to pay the costs associated with installation.
So on to the SDP. What exactly does it look like?
The SDP in it’s basic form is a very simple patch panel. The faceplate contains a number of RJ45 keystones and inside the unit there is a VDSL rated master splitter and a terminal block for interfacing with a house alarm. Ports 5 and 6 can be fitted and connected to RJ45 faceplates elsewhere in the house using cat5e or cat6 cable for connecting other PC’s or devices to your router to form a home network.
Your incoming phoneline is terminated to a VDSL rated master filter that is located inside the unit and your modem is now connected to port 1 of the SDP. Port 2 is the voice output from the VDSL filter, while port 3 is connected internally to existing phone jackpoints in your house. Port 4 is connected to port 3 and allows you to plug a phone in directly to the SDP. The PSTN jumper clip (shown in the image above) bridges your incoming voice services to your internal house wiring. Removing this and plugging a phone directly into port 2 allows a simple isolation test to be performed to establish very quickly check if a fault (such as no dialtone) is an internal wiring fault or is located between the premises and the cabinet or exchange.
The following images show a typical SDP installation:
The SDP itself is unpowered and requires no power to operate. Under development however is a battery backup module that allows home networking equipment to stay powered during a power cut. This is particularly important as we move into the fibre world with Fibre To The Home (FTTH) deployments and move towards using VoIP as a primary voice line replacement. With FTTH all voice services use VoIP as analogue phone services can’t be carried over fibre optic cabling. The loss of power to your home will mean a loss of all phone and internet services, as unlike Telecom’s existing copper network which has batteries and generators at both cabinets and exchanges to maintain power during an outage, the equipment in your house can only be powered by your own electricity. The battery backup will allow you to keep your equipment powered so phone calls can still be made during a power cut.
It’s worth noting that while a lot of media attention has focussed on the battery backup issue and the potential inability of people to contact emergency services during a power cut if they use VoIP services, that a large number of New Zealand homes currently only use cordless phones that are rendered unusable in a power cut anyway. People should ensure that they have at least one corded phone in their house that will allow them to make calls during a power cut.
There are two primary methods of connecting a SDP – one with a phone service delivered over POTS (as is the case for most people now), and one where a VoIP service is used as a primary voice line. The following example shows a typical SDP installation where a customer has voice (POTS) and DSL services provided over copper.
One of the great things about the SDP is that it allows a very simple transition process to a VoIP based phone service. Right now a large number people have installed their own analogue telephone adapter (ATA) at home and use VoIP services such as VFX or 2talk for their phone line. Many have also opted for Vodafone Home Phone Wireless boxes which use Vodafone’s mobile network. In both cases many people choose to simply plug a phone into the port on their ATA or Home Phone Wireless box because hooking this up to their existing house wiring is a process that is beyond many people’s capabilities. With the SDP, delivering a dial tone to any existing jackpoint in your home is a simple two step process – simply remove the PSTN clip and run a cable from your ATA or At Home box into port 3. Every jackpoint in your home that is connected to the SDP will now be connected to the ATA.
The SDP isn’t magical but it’s certainly a very cool little unit. Poor internal wiring is an issue that affects a large number of DSL customers, many of whom are totally oblivious to the issues and put up with speed related issues and problems such as frequent disconnections that can be directly attributed to poor internal wiring. To deliver optimum performance on ADSL2+, users should really have a central splitter installed, and for VDSL this will be mandatory. The SDP becomes a logical replacement for a master filter installation – rather than just install a basic filter the SDP fills a void that exists where people don’t want to spend significant amounts of money to replace wiring in their house, but want a cost effective way to be able to take advantage of faster broadband speeds and also future proof themselves for the arrival of fibre and VoIP services.
It is not a replacement for a proper structured cabling solution such as those recommended by the TCF, and if you are building a new home or upgrading your home then a structured cabling system should be seen as a key requirement.
If you’re wondering where you can sign up for one you’ll just have to wait a little while yet still. Chorus will be responsible for the installation but will not take orders directly - you will be able to request an installation through your ISP. The launch is not far away, and I’m sure we will see plenty of publicity surrounding the rollout when it does happen.
While Vodafone have offered international roaming since the mid 90's (when BellSouth entered the market) one key feature missing was the ability for a person calling your mobile phone to leave a voicemail message if your phone was turned on (ie it rang) and was not answered. This is a feature known as Late Call Forwarding.
If you had activated call forwarding so that all calls were forwarded to voicemail or had your phone switched off then callers would be able to leave messages. If your phone was switched on and rang, people calling you would either receive a disconnect tone after the specified timeout period, or in some cases received a prerecorded message. If you were roaming on the Vodafone Australia network then this feature was available and callers could leave a message, however anybody who has roamed to Australia would also have noticed that Vodafone billed you the standard $1 per minute roaming charge for voicemail deposits, a charge they loved to hide by not mentioning it anywhere on their website.
As of this week Vodafone NZ have upgraded their network to support Late Call Forwarding on all roaming destinations. Now no matter whether your phone is on of off people calling you will be able to leave you a voicemail message. And best of all you will no longer be charged for voicemail deposits!
Just remember though that standard international call costs still do apply when accessing your voicemail box to listen to messages - they haven't been generous enough to waive these!
Those who have followed by blog posts over the years will have seen numerous posts from me in regards to home structured cabling solutions. I have installed cabling in a number of new homes over the past few years as well as having retrofitted a number of older homes. I've also written some DIY installation guides that I hope to find time to update in the near future as there have been some changes recently in the recommendations for home cabling.
In early 2009 the Telecommunications Carriers Forum (TCF) established a working party to prepare a Code of Practice for Residential and Small Office Premise Wiring. The project goal was to develop a code that could be used as a benchmark for all installers who are installing or retrofitting cabling solutions in a residential or small business situation. Telecom had created PTC106 in the late 90's to deal with the planned growth of home networks, and this standard has been largely developed on that, with updates to reflect changes that have occurred in the past decade, particularly with recent and planned fibre to the home (FTTH) deployments.
By law in New Zealand there is no requirement for new homes to have any form of structured cabling solution. In my opinion this should be a legal requirement, in the same way that insulation and double glazing are now mandatory. We are in the early stages of a Government funded FTTH rollout to the majority of homes in New Zealand - what most people don't realise is that it's no good having a fibre connection to your house without suitable wiring inside your house. One could compare this to running electricity to a home 75 years ago that had no existing power cabling, switches or lights!
While the Government has talked about the costs of deploying fibre to your doorstep, nobody has yet talked about the cost of actually connecting your house to this fibre. The costs of retrofitting an existing home to take full advantage of the fibre connection to your door, as well as installation of the hardware required for fibre could easily run from a minimum of $1000 upwards, with costs probably approaching $2000 - $3000 if new cabling is run to every room back to a new patch panel. The costs of installing cable in a brand new home that is under construction is minimal compared to the costs of attempting to retrofit a house afterwards. In my opinion Minister's should be taken to task and to explain why there are no minimum requirements, because right now there are new houses being built with phone cabling being installed in ways that are incapable of even delivering optimal ADSL speeds, let along being able to easily support advanced services in the future.
The new TCF guidelines future proof your house for the introduction of fibre, and also for the introduction of Telecom's Next Generation Voice services that are being launched this year. Most people are probably unaware that by the end of 2010 Telecom are required by it's deed of undertaking with the Government to have 17,000 lines switched to a Next Generation VoIP platform for all voice calls. This will mean the installation of a residential gateway (RGW) on the premises that will deliver VoIP and internet to your house over an EUBA ADSL2+ internet connection, with a built in ATA allowing existing phones to connect to a VoIP service for your voice services.
These new guidelines recommend a minimum of 2 x RJ45 jack points and 2 x F type coax connections in every room in the house, and 4 x F type coax connections in the lounge or location where the primary TV will be located. A minimum of tri-shield RG6 coax cable is to be used so it meets the requirements of the Freeview|HD UHF service, TelstraClear's HFC network in Wellington, Kapiti and Christchurch, and that of Sky TV.
The home distributor serves as a central point where an ADSL modem, router and patch panel is located. It also serves as the home for a Optical Network Terminal (ONT) when fibre eventually makes it to your home. The ONT converts the optical signals an an electrical form and will connect via an Ethernet cable to a router that will provide internet to your home. Photos showing a typical home distributor (as being deployed by WxC in existing FTTH installations) can be viewed here.
If you are building a new home or involved in alterations to an existing home then this new guide should be essential reading. If you are in the process of building or planning to build a new home the installation of suitable cabling to future proof yourself is essential.
All the information you need to know is available on the TCF website
Over the coming months approximately 250 FM radio station frequencies in New Zealand will be changing. This accounts for around a third of all FM frequencies that are used in New Zealand.
When FM transmissions first began in New Zealand in the 1980's the channel spacing (the gap between stations) and frequency allocations that were used were not optimal in some regions. This means that in some areas the ability to broadcast new stations was hampered, and interference in adjoining regions could also occur which resulted in some frequencies being unavailable for use.
In April 2011 the usage rights for all AM and FM radio stations in New Zealand come up for renewal. In 2003 the Government agreed on a policy for existing rightholders to enable them to purchase 20 year licences from the 2nd April 2011 and in set new pricing formulas for usage rights of these frequencies. Over the past couple of years planning work has been under way to change many of these frequencies to ensure they are reallocated in a way that best suits New Zealand and allows for additional radio stations, as well as allowing the ability to offer services as as HD radio in the future if radio stations see this as an option.
Starting in June 2010 and continuing into early 2011 a significant number of frequency changes will occur, publicity for these changes has just started to appear and full details of every change, including the new frequencies is available from
I'm not the only person asking myself this question today after the Commerce Commission backtracked on their earlier decision and recommended regulation of Mobile Termination Rates (MTRs) in New Zealand. This is an about face from their February decision that recommended against regulation, and instead that a voluntary undertaking by Vodafone and Telecom be accepted. A final decision will be made by the Minister, Steven Joyce, in early June.
If the decision to regulate is made by the Minister the first question that has to be asked is how long it will take before regulation will take affect. The current MTAS investigation has taken 18 months to reach it's current point, and there are certainly plenty of people in the industry who now believe it could be the very least another 12 months before regulation takes effect. If this was the case it would occur before the expiry of Vodafone and Telecom's existing agreements with the Crown. Trying to introduce regulated prices before then runs the risk of legal action from Vodafone and Telecom - a voluntary agreement on the other hand won't suffer the same fate.
It is also worth remembering that the Commission's preferred outcome was voluntary industry undertakings rather than regulation. It's not hard to take the view reading through documents between the Commission, Vodafone, Telecom and 2degrees in late 2009 that the Commission set strict guidelines on what would be acceptable in these voluntary undertakings. This undertaking was formed and revised many times to meet those guidelines. It seems since then the goalposts have now moved.
A 12 month delay will possibly generate upwards of $100 - $150 million in extra profit between Vodafone and Telecom, a figure based upon estimates of what the voluntary offer from Vodafone and Telecom will cost them. The cynic in me can't help but think such a delay only benefits two parties - Vodafone and Telecom. It certainly does not benefit the end user, or 2degrees. Have the Commerce Commission in effect been railroaded without realising the implications of their change of mind?
So why could regulation take so long? First of all we have to establish the actual reason for the MTAS investigation. Despite popular opinion being that it was launched to force the retail costs of mobile calling down, this was never a focus of the investigation.
In November 2008 the Commerce Commission commenced its investigation into whether the mobile termination access services should be regulated, due to concerns that a combination of mobile termination rates that are significantly above cost, with significant on-net discounting, creates a barrier to competition in the mobile market. The Commission's investigation did not look at the prices that consumers directly pay for mobile services.
Reading through a number of documents from the Commission it is very clear that they had two key goals in mind
To establish a true cost for MTR rates. Due to voluntary undertakings accepted by the previous Labour Government, concern was raised that our MTR rates were well in excess of the true cost and significantly higher than Australia. Compared to OECD averages and average long term exchange rates our MTR rates were about average however regulators in Europe were aggressively targeting MTRs with the goal of lowering them significantly.
To consider whether on-net calling deals are anti-competitive. Debate raged on about whether higher MTRs encouraged an environment where cheaper on-net calling became the norm. The argument is that this forms a barrier to the entry of smaller players into the marketplace, however there are arguments against this including setting asymmetrical MTRs for new networks. This allows calls off-net to be charged at a different rate to the inbound MTR revenue received by an operator, resulting in a net gain to them. 2degrees have an asymmetrical agreement in New Zealand.
In light of the announcement yesterday many people see Vodafone as having scored an own goal with the launch of their Talk plan offering on net calling at a cheaper rate than they were willing to offer other providers to terminate traffic on their own network. I don't believe this for one minute - there are some exceptionally good arguments against this and Vodafone's pricing is no different to many other deals that already exist in the marketplace, and in the rest of the world. Cheap on-net calling has become very common in the global mobile market in recent years - in Australia new plans from 3, Vodafone and Virgin all offer unlimited on-net calls. In Europe it's very common to find operators offering large numbers of free on-net minutes with every prepay topup, or offer free on-net weekend or evening calling. None of this is new. Even Taylor Reynolds, the OECD's top telecommunications analyst, was asked about Vodafone's plan when he visited New Zealand last month. His response was one of surprise that we were even paying for on-net calls at all because a lot of OECD operators give users free on-net calling! Turkey have imposed regulation to stop this, with TurkCell being unable to offer on-net calling rates at less than their inbound MTR rate. Such a regulation here would mean that calling plans such as Best Mate, Favourites, TalkZone, and capped calling between Telecom landlines and mobiles would all be illegal. I can only assume that organisations in support of the Commission's decision also support retail price controls and want to see plans such as these made illegal.
A lot has changed in the global marketplace in recent months. In April UK telco regulator Ofcom announced significant MTR rate cuts from the current rate of 4.3p per minute to 0.5p per minute by 2015. Such a fundamental move by Ofcom possibly caught the Commerce Commission off guard, and one has to ask the tough question about the Commission's true reasons for changing their mind. Could the real reason be that the investigation has dragged on for so long, the goalposts have moved numerous times, and the voluntary undertakings that they helped shape are now seen as being significantly higher than new regulatory proposals from EU regulators be the real cause of this about face?
Getting to where we are now has taken 18 month. In that time we're seen fundamental changes in the NZ marketplace with the extremely successful launch of 2degrees. We are finally seeing prices fall as we now have competition in the marketplace. Are we facing the likelihood of another 12 - 18 months of delays while lawyers, analysts, and regulators battle it out deciding which pricing model best suits New Zealand? Or are we better off accepting voluntary undertakings from the industry, that were by large shaped by the Commission, and getting on with things?
G.722, HD Voice and HD Audio have become the latest buzzwords in the VoIP (Voice Over Internet Protocol) market in the last year. They are all words to describe the same thing - wideband audio that delivers voice calls using VoIP with audio quality that is greatly superior that of a regular landline or mobile phone call.
Since the late 1970's G.711 has been the defacto standard in the telephony world for voice encoding as we moved into the digital world with fully digital phone switches, and moved away from analogue phone exchanges. G.711 sampled audio at 8kHz and created a 64kbps audio stream using two slightly different methods depending on where in the world you were located. u-law was used in Japan and North America, and a-law was used in the remainder of the world. u-law and a-law were also used as the audio codec for both T1 and E1 circuits as well as ISDN, hence the reason that channels are all 64kbps. Since the mid 90's as VoIP has rapidly taken over in the telephony world G.711 has still remained as the codec of choice.
Things are now slowly changing however, since computers now have far more processing power than they did in the 1970's the ability to process, compress, and decompress audio in real time is now far easier. This has lead to the creation of new audio codecs in recent years that can sample voice with greater frequency ranges, and also compress audio to use less bandwidth without any noticeable loss of quality.
G.729 delivers call quality that is only marginally less than that of G.711 but uses approximately half the bandwidth. This offers very significant benefits as we move to fully IP based networks as it allows greater volumes of voice traffic to be carried. G.722 on the other hand uses a similar amount of bandwidth as G.711, but samples audio at 16kHz which is double that of G.711 and delivers what many regard as far more natural sounding audio. Newer codecs such as Siren22 that was created by Polycom take things a step further and sample audio at 22 kHz, resulting in audio that sounds even better but with the downside of using significantly more bandwidth. G722-2 or AMR-WB is also slowly making it's presence felt in the mobile market with a number of mobile carriers having recently deployed this codec which offers superior 16 kHz voice quality over a mobile connection when the end users both have handsets that support this codec.
Many modern IP PBX's support the G.722 audio codec and with most new IP phones supporting G.722 it's certainly a feature that many people are rapidly discovering. The enhanced audio quality also makes audio conferencing a vastly superior experience. While G.722 is currently supported by a growing number of VoIP providers around the world, the one "limitation" of G.722 is that there is no benefit when calling a landline, mobile phone, or another VoIP user who doesn't have G.722 hardware as the call will only be as good as the audio quality from the remote party. Here in New Zealand WorldxChange fully support G.722 on their VFX and DVX platforms for calling between other DVX and VFX users, and G.722 calls between users on different VoIP providers who peer IP calls and support G.722 are also possible. Telecom New Zealand's new VoIP platform and newly released SIP trunking product does not support G.722 at this stage and I see this being a fundamental downside for them as they move towards launching this product publically in the coming months.
I'm presently reviewing a number of mid range and high end VoIP handsets for Geekzone. I have a Snom 820, Cisco SPA509G, Aastra 6755i, Yealink T28P and Polycom IP450, all of which support the G.722 codec. As part of this review I've recorded some audio samples and have them available below for you to listen and compare for yourself.
Sample 1: Asterisk recording "Your extension number is two two two". This file uses the GSM codec for "Your extension number is" and uses the G.722 codec for the "two two two"
Sample 2: Asterisk recording "At the sound of the tone the time will be exactly twenty fourty nine". This file uses the GSM codec for "At the sound of the tone the time will be exactly" and uses the G.722 codec for the "twenty fourty nine" CLICK HERE FOR SAMPLE 2
Sample 3: Asterisk Voicemail recording using G.729. This is a sample of the Asterisk voicemail prompts using recordings in the native G.729 format.
Sample 4: Asterisk Voicemail recording using G.711. This is a sample of the Asterisk voicemail prompts using recordings in the native G.711 format.
Sample 5: Asterisk Voicemail recording using G.722. This is a sample of the Asterisk voicemail prompts using recordings in the native G.722 format.
Sample 6: Asterisk voice call using G.729. This is a sample of a phone call using the G.729 codec.
Sample 7: Asterisk voice call using G.711 a-law. This is a sample of a phone call using the G.711 a-law codec.
Sample 8: Asterisk voice call using G.722. This is a sample of a phone call using the G.722 codec.
The differences between the various codecs should be readily apparent!
"In a letter to me dated 19 April 2010, the Commerce Commission indicated that a new retail offer launched by Vodafone on 13 April 2010 may be material and may have the potential to affect the basis for the Commission's recommendation," says Mr Joyce."
The plan in question is Vodafone's Talk Plan - a $12 addon for Prepay users that allows calls to other Vodafone customers or any landline in New Zealand any time of the day or night, at an effective rate of 6c per minute. The Commission appears to believe there could be an issue with with this plan and that it is is "anti-competitive" by offering on-net termination rates at a price less than Vodafone's offering that had been submitted to the Commission. This view can be argued against in many ways, including the fact many customers do not use all included minutes and that a large number of these calls will presumably be to landline phones where Vodafone are in fact paying approximately 2c exl GST per minute to terminate calls.
If Vodafone's plan was enough to trigger a serious rethink on MTR rates, questions serious questions need to be raised about the knowledge the Commerce Commission of the mobile market with New Zealand, and ultimately whether they are competent enough to be offering advice to the Minister.
As of the 1st April 2010 the MTR costs for Telecom are 14c + GST for voice and 14.4c + GST for Vodafone. SMS rates on both networks are 9.5c + GST per message. Current interconnection costs for mobile to landline traffic is approximately 2c + GST per minute.
Telecom offer a plan called Telecom Talk & TXT 300 for $29.95 per month that offers
300 Nights and Weekends minutes to any mobile or network
300 TXT messages to any network
20 Daytime minutes to any network
If all of those 320 minutes were used to call another Telecom customer it represents a cost of 9.36c per minute, under Telecom's current MTR of 14c excl GST per minute. This rate calculation is based on no SMS messages being sent - if a modest cost of 4c (excl GST)  was used to model this equation it would result in a cost of cost of 5.14c per minute, which is lower that Vodafone's Talk offering!
If Vodafone's Talk is so bad why is Talk & TXT not being targeted also? What's even more interesting is that based upon current MTR costs if all included TXT message and voice minutes were used to call a Vodafone customer it would result in inbound revenue to Vodafone (based on whole minutes) of $83.90
ZOMG!!!!111!!! Telecom are actually losing $53.95 per month on that customer. How can that be? Quick, somebody launch a Ministerial enquiry!! It should be illegal for a company to sell a product under cost!!
Telecom also offer a capped rate of $1 + GST for calls of up to 60 minutes from a Telecom business landline to a Telecom mobile. Once again this is below current (and proposed) MTR rates.
Vodafone also offer You Choose addons that have been in place for a number of years that also give calls both on and off net for less than current (and in some cases proposed) MTR rates.
Your Time 100 - 100 mins to any network or landline for $14.95 = 15c per minute
Your Time 300 - 300 mins to any network or landline for $29.95 = 10c per minute
Your Time 200 - 200 mins to another Vodafone mobile for $11.95 = 6c per minute
There is a myth in this world that mobile calling rates are related directly to retail call pricing. These prices should make it clear to people that no such link exists.
So my advice to the Commission and Minister is quite clear - pull your head out of the sand and do your research. Right now you look like nothing but a pack of idiots after bragging about finding the "smoking gun" - except you haven't told us anything new. Networks have offered calling rates for both on-net and off-net that have been below MTR costs for many, many years.
What exactly is so significant about Vodafone's offering that has lead to the action you have taken? If on-net termination is your "smoking gun" why have Telecom or their Talk and Text 300 Plan not been mentioned when this plan can offer effective on-net termination rates that are even lower that what Vodafone's Talk offering has?
Every single person in NZ is relying on you to deliver us competition in the marketplace. It seems highly unlikely that you are actually capable of doing this when you're not even aware of current offerings and pricing that exist in the marketplace today.
It should be pointed out as that I have no links with Vodafone or Telecom other than being a Vodafone customers. I think calling prices in NZ are too high and want to see them come down.
 4c + GST is the maximum rate that would be charged per SMS under the Hybrid Bill and Keep system proposed by Vodafone and Telecom.
In November 2008 the Commerce Commission began an investigation into Mobile Termination Access Services (MTAS), also known as Mobile Termination Rates (MTR) - the wholesale prices mobile providers charge each other to terminate calls on their networks. The goal was to assess "whether the mobile termination access services should be regulated, due to concerns that a combination of mobile termination rates that are significantly above cost, with significant on-net discounting, creates a barrier to competition in the mobile market"
I've had a great interest in the MTAS investigation and have blogged about it on numerous occasions. Last week I wrote a slightly tongue in cheek blog post on Vodafone's newly released Talk plan suggesting that Vodafone now welcomed regulation of rates and it is with some irony that on Monday both the Commerce Commission and Minister for Communications and Information Technology, Steven Joyce, announced that they were investigating this new plan to see whether this should be factor in determining the outcome of his decision to either accept a voluntary industry agreed pricing model, or force Government regulation upon the industry.
Despite my tongue in cheek comments last week my stance on the matter is one of impartiality. I agree that mobile calling costs in New Zealand are too high, however I realise that MTR costs are not the cause of high costs in New Zealand. A lack of competition in the marketplace is the sole cause of high rates, competition from 2degrees and virtual network operators such as Slingshot, TelstraClear and Compass has forced retail prices down. The exception has been regular calling prices for Prepaid users on Vodafone and Telecom which are stick stuck in the last decade at 89c per minute.
Revenue for mobile operators is a two way system. Revenue is gained from mobile users who make calls, send text messages, use data or access STK (SIM toolkit) based network services. Revenue is also gained from inbound termination rates that are in essence "earned" by that user, and the network as a whole, when inbound calls and text messages are sent to a user of the network. The common argument is that if revenue is lost from one part of the business it will simply have to be recovered from another part of the business, an economic principle known as the "waterbed effect".
The real world reality is that terminating traffic on any telecommunications network, whether it be a mobile network or a fixed line network has an inherent cost, whether this figure is small or large becomes a moot point, the key point is that a cost is incurred. Carriers have two ways of recovering this revenue, by charging the carrier who is terminating traffic on their network using the Calling Party Pays (CPP) billing model or the Receiving Party Pays (RPP) model, also known as Mobile Party Pays (MPP) in some countries. CPP means that the network charges the network terminating the traffic their negotiated MTR cost to terminate traffic and is the common model used by mobile carriers in most parts of the world. RPP/MPP means that the network terminating the traffic pays no cost but the receiving party is charged by the carrier when they answer the call. This is how an 0800 number works in New Zealand and is also how mobile users are typically charged in North America where they normally pay a flat fee per month for incoming calls or have these incoming calls deducted from their included minutes.
In recent years the MTR debate has become a hot topic for regulators around the world as they have had to try and tighten their grip on what they see as a stranglehold on customers that is artificially keeping the prices of calling mobile phones from landlines and mobile calls between networks much higher than they should be. What is clear is that while many see MTRs as the smoking gun, and that by cutting MTRS they will cut the price of calls and text messages, nobody is able to agree on exactly what constitutes a fair price for termination, or even how much terminating a call on a mobile network really does cost. What is clear is that as MTRs have been forced down by European Regulators prices have not necessarily followed suit , and in many cases have increased as operators try to recover lost revenue .
If McBiddle's (a global fast food chain focussing on burgers) were regulated forced by a Government body to slash the price of their McBiddle Deluxe burger by 50% it's inevitable that these costs would have to be reclaimed from elsewhere, whether by cost cutting, charging a fee to dine in, cutting free drink refills or making the McBiddle burger only available as part of a combo meal. The mobile market is no different.
In 2005 the New Zealand Commerce Commission took the opinion that the waterbed existed when in it's final report into regulation of MTAS it wrote:
A regulated fall in mobile termination rates is likely to lead to some rise in the price of mobile
services (mobile subscription and mobile-to-mobile calls), relative to the scenario of no
regulation, or alternatively, lesser price reductions than otherwise. To the extent that
regulation leads to a relative increase in mobile prices, and a reduction in mobile
subscription levels, a range of determinants may be generated. Accordingly, this effect has
been factored into the cost-benefit analysis
So what annoyed the the Minister and the Commission yesterday?
200 minutes of calling to any other Vodafone mobile or to any landline phone in New Zealand (on any network) for $12 per month
So what's wrong with that you might ask? Well I raised the issue last week that if those whole 200 minutes were used to call between Vodafone mobiles then it would represent an on-net net MTR rate that is less than Vodafone are willing to offer other carriers to terminate voice traffic. As many people have pointed out not everybody will use all of these minutes or even use them all to call another on-net mobile phone. It is expected that calls to landline phones will make up a significant percentage of these 200 minutes, and Vodafone will be paying approximately 2c per minute to terminate these calls with a fixed line provider. If these 200 minutes were split evenly between mobiles and landlines the net cost of calling another Vodafone mobile would be 12c per minute which is around the same rate that Vodafone and Telecom have proposed to the Minister.
It's worth remembering that deals like this are nothing new. Vodafone have already offered a Your Time 200 You Choose addon for a number of years that offers 200 mins of on-net only calling for $11.95 per month. Telecom offer business customers the ability to make calls to any Telecom mobile phone and speak for up to an hour for $1 + GST. Telecom Favourites also offers the ability to nominate mobile and landline numbers that can be called as much as you want for a flat rate of $6 per number, and likewise Vodafone also offer Best Mate which allows unlimited calling to another on-net Vodafone mobile. Both networks have also had SMS plans that deliver messages both on and off net for significantly less than their current MTR rates.
Cheap on-net calls have become a feature in recent times everywhere in the world. In Australia Vodafone, Virgin and Three all now offer free on net calling and text messaging as a standard feature of many new plans. Vodafone, Optus and Three also offer unlimited plans for $99 offering unlimited calling to landlines and mobile phones on any network in Australia for $99 per month with MTR costs of approximately 9c per minute for mobile calls and fixed price termination rates for calls to landlines.
So the question has to be asked : What issues can the Commission and Minister have with Vodafone's new plan? it does not represent a significant move away from anything that already exists in the marketplace.
And the tougher question: Should the Minister accept voluntary undertakings from the industry or should he regulate?
Those pushing for regulation have to realise that the Minister sending the discussion back to the Commerce Commission could easily face another 18 months worth of delays before any regulation occurs. Are we better to accept the offer that is on the table that will take effect from this October and deliver instant MTR reductions and regular drops down to 6c per minute (billed per second) in 2014 or should we start the entire 18 month long MTAS process again, with no clearcut agenda that will force the Commissioners to accept regulation, while MTR rates stay at at their present levels?
Nobody can say it's not a challenging time ahead for Steven Joyce!
 Mobile Regulation and the "waterbed effect" Genakos & Valletti Jan 2010 http://www.voxeu.org/index.php?q=node/4448
NOTE: PLEASE READ THIS ENTIRE DOCUMENT BEFORE ENTERING THE URL LISTED BELOW INTO YOUR DEVICE. THIS URL WILL OVERWRITE SETTINGS THAT ARE ALREADY PRESENT AND THE SETTINGS IT WILL CHANGE ARE CLEARLY LISTED BELOW. I ACCEPT NO RESPONSIBILITY FOR ANY LOSSES (SUCH AS YOUR OWN TIME) THAT MAY OCCUR AS A RESULT OF USING THIS CONFIGURATION FILE. THESE SETTINGS WILL NOT DAMAGE YOUR HARDWARE BUT COULD RESULT IN THE INABILITY TO DIAL SOME NUMBERS IF THE DIALPLAN DOES NOT MATCH YOUR CURRENT ONE.
INSTRUCTIONS ON HOW TO REMOVE THIS CONFIGURATION ARE AT THE BOTTOM OF THIS POST.
If you're using a VoIP provider there is a good chance you may well have a Linksys IP phone or Analogue Telephone Adapter (ATA). The Linksys 92x/94x series of IP phone, SPA2102 and 3102, and older SPA3000 and PAP2 ATA's are a very popular choice due to their great performance and reasonable pricing.
If you live in New Zealand and are using one of these are a handful of configuration changes that need to be made to configure the device to New Zealand telephone standards and to ensure that the tones heard match those from PSTN providers such as Telecom, TelstraClear, Orcon and Vodafone who all use the same tones which are specified in Telecom's Telepermit specifications. If you fail to correctly set some other settings such as the FXS impedance on your device you risk echo on your calls due to an impedance mismatch with your analogue phone, likewise if you set the incorrect impedance on the FXO port on a SPA3102 or SPA3000 you will also risk echo due an impedance mismatch with the PSTN line. Ideally you'll also want a correct dialplan that allows calls to connect immediately after you dial the number, and not have to wait several seconds for this to happen.
At present WorldxChange are the only VoIP provider in New Zealand to offer a full autoprovisiong service for their customers. If you sign up to their VFX or DVX service you can enter a URL into your device which will connect to their servers and correctly configure your device with the optimal settings and user settings.
DO NOT USE THIS FILE IF YOU ARE ON VFX or DVX. THERE IS NO NEED AND IT WILL WIPE YOUR CONFIGURATION!
If you're using another provider such as 2talk, iTalk, or a Linksys device on your own IP PBX, you're on your own when it comes to configuring your device. These providers and others provide a list of settings, however many of these are either not correct or not optimal for New Zealand. This leaves people who know nothing about VoIP left to configure their own device, and in many cases making mistakes or using incorrect settings that may result in an inferior quality call, and left blaming VoIP as being an inferior technology when the reality is it's not.
I've been working for several weeks on a New Zealand specific configuration file for Linksys devices, and also hosting this file so that anybody who wants to quickly and easily configure their device can enter a web URL into their device which will download all the correct settings. The only thing required by the end user is to configure their SIP user account details, network settings, and a couple of other optional setting that I'll leave to the end user such as the preferred voice codec. By default your device will check once per week for a new configuration file however this can be easily disabled if you do not want to do this. Instructions on how to change this are at the bottom.
To enable this provisioning file log into your device and click on the Provisioning tab. Into the Profile Rule field enter the following http://voipzone.co.nz/spaconfig.cfg Also check that the Provision Enable is set to Yes and Resync On Reset is also set to Yes
Your device will now reset and download the provisioning file. This can take approximately 30 seconds or so to occur and once it is complete the device will reset again. If you look in the menu options listed below you should now see these updated to reflect the new settings.
A list of all settings in my file is listed here. This file could change in the future if any updates are needed and because it's a XML file rather than a LInksys compiled configuration file you can view the contents of the file at any time from a web browser by entering the URL above.
CONTENTS OF THIS PROVISIONING FILE
<!-- Linksys SPAxxx Config File with NZ specific indications and setup (C)2010 Steven Biddle [email protected] ->
<Call_Return_Code ua="na"> </Call_Return_Code>
<Blind_Transfer_Code ua="na"> </Blind_Transfer_Code>
<Call_Back_Act_Code ua="na"> </Call_Back_Act_Code>
<Call_Redial_Code ua="na"> </Call_Redial_Code>
<Call_Back_Busy_Act_Code ua="na"> </Call_Back_Busy_Act_Code>
<Cfwd_All_Act_Code ua="na"> </Cfwd_All_Act_Code>
<Cfwd_All_Deact_Code ua="na"> </Cfwd_All_Deact_Code>
<Cfwd_Busy_Act_Code ua="na"> </Cfwd_Busy_Act_Code>
<Cfwd_Busy_Deact_Code ua="na"> </Cfwd_Busy_Deact_Code>
<Cfwd_No_Ans_Act_Code ua="na"> </Cfwd_No_Ans_Act_Code>
<Cfwd_No_Ans_Deact_Code ua="na"> </Cfwd_No_Ans_Deact_Code>
<Cfwd_Last_Act_Code ua="na"> </Cfwd_Last_Act_Code>
<Cfwd_Last_Deact_Code ua="na"> </Cfwd_Last_Deact_Code>
<Accept_Last_Act_Code ua="na"> </Accept_Last_Act_Code>
<Accept_Last_Deact_Code ua="na"> </Accept_Last_Deact_Code>
<Block_Last_Act_Code ua="na"> </Block_Last_Act_Code>
<Block_Last_Deact_Code ua="na"> </Block_Last_Deact_Code>
<CW_Act_Code ua="na"> </CW_Act_Code>
<CW_Deact_Code ua="na"> </CW_Deact_Code>
<CW_Per_Call_Act_Code ua="na"> </CW_Per_Call_Act_Code>
<CW_Per_Call_Deact_Code ua="na"> </CW_Per_Call_Deact_Code>
<Block_CID_Act_Code ua="na"> </Block_CID_Act_Code>
<Block_CID_Deact_Code ua="na"> </Block_CID_Deact_Code>
<Block_CID_Per_Call_Act_Code ua="na"> </Block_CID_Per_Call_Act_Code>
<Block_CID_Per_Call_Deact_Code ua="na"> </Block_CID_Per_Call_Deact_Code>
<Block_ANC_Act_Code ua="na"> </Block_ANC_Act_Code>
<Block_ANC_Deact_Code ua="na"> </Block_ANC_Deact_Code>
<DND_Act_Code ua="na"> </DND_Act_Code>
<DND_Deact_Code ua="na"> </DND_Deact_Code>
<Secure_All_Call_Act_Code ua="na"> </Secure_All_Call_Act_Code>
<Secure_No_Call_Act_Code ua="na"> </Secure_No_Call_Act_Code>
<Secure_One_Call_Act_Code ua="na"> </Secure_One_Call_Act_Code>
<Secure_One_Call_Deact_Code ua="na"> </Secure_One_Call_Deact_Code>
<Paging_Code ua="na"> </Paging_Code>
<Call_Park_Code ua="na"> </Call_Park_Code>
<Call_Pickup_Code ua="na"> </Call_Pickup_Code>
<Call_UnPark_Code ua="na"> </Call_UnPark_Code>
<Group_Call_Pickup_Code ua="na"> </Group_Call_Pickup_Code>
<Media_Loopback_Code ua="na"> </Media_Loopback_Code>
<Referral_Services_Codes ua="na"> </Referral_Services_Codes>
<CID_Act_Code ua="na"> </CID_Act_Code>
<CID_Deact_Code ua="na"> </CID_Deact_Code>
<CWCID_Act_Code ua="na"> </CWCID_Act_Code>
<CWCID_Deact_Code ua="na"> </CWCID_Deact_Code>
<Dist_Ring_Act_Code ua="na"> </Dist_Ring_Act_Code>
<Dist_Ring_Deact_Code ua="na"> </Dist_Ring_Deact_Code>
<Speed_Dial_Act_Code ua="na"> </Speed_Dial_Act_Code>
<Modem_Line_Toggle_Code ua="na"> </Modem_Line_Toggle_Code>
<Ring5_Cadence ua="na"> </Ring5_Cadence>
<Ring6_Cadence ua="na"> </Ring6_Cadence>
<Ring7_Cadence ua="na"> </Ring7_Cadence>
<Ring8_Cadence ua="na"> </Ring8_Cadence>
A BRIEF RUNDOWN OF THE SETTINGS
RESYNC PERIODIC = time of 604800 which is 7 days. The device will check every 7 days (or on reset) for a new configuration.
NTP/Time settings = Use nz.pool.ntp.org as a time server. Also correctly configure NZ DST settings. Because of a bug in earlier Linksys firmware not being able to handle DST in the Southern Hemisphere starting in a different year to the end date we reverse things and use GMT+13 as the normal time during DST and deduct 1hr from April to September.
All service activation codes have been disabled to stop them clashing with codes your VoIP provider or PBX may use. Depending on your setup you may wish to set some of these again. For example if you use an ATA you will not get the correct Call Forward dialtone with DND/CallFwd enabled if you do not map these to your VoIP provider or PBX as the ATA has no idea about these codes. This is not needed with an IP phone as the DND/Cfwd is managed via SIP messages.
All tones have been set to the NZ standard as defined by Telecom's TNA102 specifications. The only exception to this is the Reorder tone which is technically incorrect but these devices use this tone differently to normal POTS phones. All tones have been set to -15dB which is slightly louder than the -19dB Linksys default settings (I'm open to discussion as to whether this is too loud or too quiet, I personally think it's about right). Distinctive Ring cadences have also been set to the Telepermit specifications.
RTP packet size has been set to 20ms and both FXO and FXS line impedance has been set to the correct 370+620||310nF that is used here in NZ (and is clearly documented in the Telepermit specifications).
Some new firmware releases from Linksys do not support this setting. If this option is not available the safest option to use is 600 Ohm.
And now to look at the dialplan. This will pattern match virtually every number that the normal person will need to call. I've detailed the number ranges below and how they are matched. While I've put a lot of effort into this there is a chance that some errors may exist or there could be service numbers or calling card access numbers that I have missed. Any feedback on these is appreciated.
# = Asterisk/FreePBX directory
*xx = Asterisk/FreePBX shortcodes
*0xx.= Linksys codec selection. Also pattern matches *0 for Epygi Quadro Voicemail access
[2-9]xxxxxx = local calls
xxxS1 = local 3 digit PBX extns with short timeout as well as 3 digit emergency and service codes 111, 123 etc
0210xxxxxxx = 0210 + 8 digits
0212xxxxxx = 0212 + 7 digits
021[3-9]xxxxx = 0213 - 0219 + 6 digits
02xxxxxxx = 020 + 022 + 027 + 029 + 7 digits
0240xxxxxx = 0240 + 6 digits
024[1-9]xxxxxxx = 0241 - 0249 + 7 digits
028xxxxxx = 0280 + 0281 + 0283 + 0284 + 0285 + 0286 + 0287 + 7 digits
028xxxxxxx = 0282 + 0288 + 0289 + 8 digits
026[1-3]xxxxx = 0261 + 0262 + 0263 + 6 digits
0264xxxxxx = 0264 + 7 digits
0[0-9]xxxxxx = all 03 + 04 + 06 + 07 + 09 toll calls as well as 0900
0508xxxxxx = 0508
070xxxxxxx = 070 personal numbers. Allocated for use but not currently in use. Possible that shortly they may be available.
080[1-8]xxxxxx = 0800 + 0800 - 0808 as defined by NAD guidelines but not currently used
1xxx = service codes mainly Telecom
08[2-3]xxx = 082210 and 083210 for voicemail on WxC and Telecom and Telecom's 083030, 083032 and 083033 conferencing
01681x. = Telecom's USA toll free service for calling North American toll free 800 numbers
083201234 = recorded message number you are calling from
014xx = calling card platform
015xxx = calling card platform
017 = 0170 and 0172 for international directories
00x. = international calls
In trying to create a dialplan that can be used across both standalone phones and phones connected to a PBX there is one small issue I am aware of that is not possible (at least that I can work out!) to resolve. To try and pattern match local 3 digit PBX extensions as well as local 7 digit numbers means using a small delay (S1) after the phone detects 3 digits. If you are dialling a 7 digit local number and pause for too long after the 3rd digit you will find that the call is pattern matched as a 3 digit local number.
OPTIONAL SECURITY SETTING
VoIP "hacking" is becoming a real risk these days and if you have an insecure VoIP device you are leaving yourself wide open to possible fraud. Do not under any circumstances port forward the web interface for your IP phone or ATA so it's accessible from the web. This is about as secure to leaving your front door wide open!
From VoIP security perspective inbound URI calling also poses security risks that end users need to be aware of. URI calling is the ability to call another SIP device directly over the internet without the call going via a VoIP provider or PSTN. If you have a Linksys ATA at home on your internet connection somebody else using a VoIP device can call you directly by dialling the SIP URI [email protected], ie [email protected]
There have been numerous cases lately of SIP trojans actively scanning devices looking for valid user accounts. Once it detects a SIP device on port 5060 it repeatedly tries usernames until it finds the correct one. I recommend that you set "'AUTH INVITE" to 'YES' in your Linksys device configuration. This will only allow a SIP invite message from an authorised SIP peer (ie your VoIP provider). This setting will disable the ability to accept inbound SIP URI calls so if you need this ability do not change this setting.
EDIT: It seems this setting may disable inbound calls on iTalk and 2talk. If you are using iTalk or 2talk leave this setting set to 'no'. Another option which exists only in the ATA devices called 'Restrict Source IP' that will lock down inbound SIP traffic to the IP of your SIP proxy server. Setting this to 'yes' will perform a similar job.
HOW TO REMOVE OR DISABLE THESE SETTINGS
As mentioned above entering this provisioning URL this file will cause the device to attempt to reprovision itself once every 7 days to get an updated configuration file. If you want to disable this feature set the "Provision Enable" setting show in the web interface menu above to "NO". If you are going to change any of the settings listed above such as the Service Activation Codes it's important that you change this setting to "NO". If you fail to do this your changes will be deleted every week when the device checks for a new configuration file.
If you are uncertain about proceeding with this URL I recommend taking a snapshot of your current settings, in particular your dialplan before proceeding. This file will only change the settings listed above, it will not change any other settings in your device such as network or SIP user settings. If you are unhappy with the results you can return to your existing configuration by disabling the Provision Enable setting as detailed in the paragraph above, removing the provisioning URL, and manually entering your settings again.
I've been using Linksys devices for many years but only recently decided to publish this information because the number of poorly configured devices and misinformation about NZ configurations got the better of me! I'm open to any feedback or comments about this project and am very interested in comment about the dialplan settings. It is possible this setting may stop you being able to dial some numbers and some PBX's may use different codes that I have not included. Please let me know about any issues so I can attempt to resolve them.
I have also developed a modified trixbox Linksys autoprovisioning tool that will help those who are using Asterisk, trixbox or Elastix and want to correctly configure their Linksys devices with their PBX. For help with this or to suggest improvements my contact details are listed in the right.
PS: Thanks also has to go to Mike Beattie who helped test the dialplan settings.
PPS: If you are going to include these settings on your site some link love to my post and acknowledgement would be appreciated.
Vodafone today launched a new mobile add-on plan into the marketplace. Offering 200 minutes of calls to other Vodafone mobiles or landlines in New Zealand at any time of the day or night for $12 it is arguably the best value mobile add-on in New Zealand. The catch is that it's only available to Prepay users - if you're a On Account user helping prop up Vodafone's ARPU you've just been given the big finger. Vodafone do assure us this plan is coming "soon" to On Account plans, but right now we're all stuck paying more than a pimply teenager who had absolutely no brand loyalty.
$12 for 200 minutes equates to 6c per minute for a call to any other on net Vodafone mobile or landline. That's fantastic value in anybody's terms and is the cheapest available calling rate available on any mobile network in NZ for calling another mobile or landline (excluding deals such as Best Mate, TalkZone or Favorites that only allow calling to nominated numbers. The launch of 2degrees in New Zealand has finally broken the mobile duopoly that existed in New Zealand and finally lead to some significant competition for the customers hard earned dollar.
I've blogged on numerous occasions about the Commerce Commission led MTAS (Mobile Termination Access Services) investigation that has been in place for approximately 18 months. This purpose of this investigation was to look at mobile termination rates (MTRs) - the rates that mobile operators charge each other for terminating voice calls and SMS messages on their network. These rates have been falling consistently for the last 10 or so years from approximately 45c per minute down to approximately 18c per minute now. Many people believe that high MTR costs cause inflated retail mobile calling rates, a conclusion that I neither agree with or have seen compelling evidence to agree with. What is clear however is that rate should be set to reflect the cost of terminating an inbound voice call on the network, it should not be used as a revenue source for operators. International benchmarking shows that our current MTR costs are not excessive but globally pressure is being put on mobile operators by regulators to force these MTR costs down, primarily because they believe current charges are inflated and do not reflect the true cost of terminating a call in this day in age.
In early 2009 the Commerce Commission welcomed dialogue from all interested parties and in June 2009 issued a draft recommendation that recommended prices should be cut significantly. Needless to say this didn't go down well with either Telecom or Vodafone who were intent on maintaining the status quo. Because only two mobile operators existed in the marketplace the charge became almost irrelevant for calls and SMS messages between Vodafone and Telecom - while they paid the other provider money when a call made off network, they received money when a call was terminated on their network. While there was a marginal imbalance in voice termination rates, SMS termination rates were very equal for both networks which meant very little money actually changed hands at the end of the day. This cosy duopoly upset new entrant 2degrees, who aggressively campaigned for MTR costs to be lowered significantly and also pushed for a move away from the Calling Party Pays (CPP) pricing model to Bill and Keep (BAK) as a replacement pricing model. BAK would mean no money would ever be paid from one operator to another, and that mobile operators would in effect receive no money for terminating a call on their network. This model is used in the USA and typically means that a mobile user pays for incoming calls (normally out of included minutes) as a way of the mobile provider recovering call termination revenue. 2degrees funded what I consider to be a dirty tricks campaign known as Drop The Rate, Mate! that mislead people into thinking that MTR costs were the root cause of high mobile calling costs and the lack of competition in NZ, however the hugely successful launch of 2degrees into the marketplace with aggressive pricing shows that the existing regulatory environment was not broken - we were being ripped off as mobile users because of a lack of competition in the marketplace. Despite MTR costs having fallen by well over 50% in recent years, retail pricing has not followed suit with a Vodafone or Telecom prepaid mobile user still paying similar rates now to what they were three years ago.
In the following months plenty of debate took place and numerous submissions were made by all three networks putting forward their cases. The Commission indicated it would prefer an industry lead solution rather than being forced to regulate the market and in December 2009 both Vodafone and Telecom submitted final submissions to the Commerce Commission pledging to reduce MTR costs for voice calls to 12c per minute (billed per second) from October 2010 and gradually reducing to 6c per minute (billed per second) by 2014. 2degrees threw all of their toys out of the cot believing the Commerce Commission were ignoring them, and withdrew all offers they had previously put on the table.
In February 2010 the Commission delivered it's final report to the Minister for Communications and Information Technology, Steven Joyce. This report recommended that the Minister should accept the submissions from both Telecom and Vodafone rather than regulating the market, but the decision was not without controversy, only two of the three Commissioners involved in the investigation agreed with this approach, with Commissioner Anita Mazzoleni recommending that regulation of the market take place.
So now back to todays news..Vodafone have now told us loud and clear that 6c per minute is now sufficient revenue for an on net call from one Vodafone customer to another Vodafone customer. One has to now ask the question - why do Vodafone believe that the rate for any other mobile network operator to terminate a call on the Vodafone network should exceed 6c per minute from today? If that 6c was split 50/50 between the revenue cost of the A party making the call and B party answering the call then that MTR cost should not exceed 3c per minute. What possible argument could Vodafone have for charging another network operator more to terminate a call on the Vodafone network than they "charge" themselves?
The decision to either accept the proposals from Vodafone and Telecom currently sits with Minister Joyce, who has the decision as to whether he should accept voluntary proposals from both networks or with the full force of the law regulate MTR pricing. Vodafone have now very openly come out and made a mockery of many of their claims that MTR costs can't drop to 6c until 2014. I'm no fan of regulation but if I were Minister Joyce I'd calling Vodafone's bluff and recommending regulation. Thumbing your nose at both the Commission and Minister like Vodafone have done is not smart business.
*= my opinion of what Vodafone's new plan represents