New Zealand’s third mobile operator, NZ Communications, has today submitted a Voluntary Undertaking to the Commerce Commission proposing a dramatic change to the way that mobile phone companies charge each other for calls that will result in significant price reductions for consumers.
The company is advocating that the industry moves to a net zero rate pricing structure known as “Bill & Keep” which means that mobile phone operators recover costs from their own customers rather than competitors.
According to NZ Communications Chief Commercial Officer, Bill McCabe, “the cost of mobile communications for New Zealand consumers is exorbitantly high by any world standard.”
“Mobile prices are artificially high because of the excessive wholesale charges imposed by incumbent networks for calls to mobile numbers. Change is long overdue.”
Known in the industry as Mobile Termination Rates (MTRs), inflated wholesale charges are widely acknowledged to result in high retail prices, low usage, competitive distortions and huge financial transfers from small operators to incumbents. Consumers’ pockets and the wider economy suffer as a result.
Similar in structure to the US, Singapore, Hong Kong and increasingly argued for in the European Union, “Bill & Keep” tackles all the competitive distortions that result from high MTRs without any downside.
“It is quick to implement, simple to police, entails very low ongoing regulatory costs, is pro-competitive and has clear precedents in New Zealand that would lead to maximum long term benefits for consumers” says McCabe.
“If New Zealand is going to able to trade its way through this economic downturn then cost effective communications will have to play a principle role.”
ENDS
Note for Editors:
NZ Communications is a privately owned New Zealand company building a third mobile phone network for New Zealanders, so Kiwis will have real choice and true competition in the mobile telephone market.
Twenty percent of NZ Communications is owned by Maori interests via the Hautaki Trust. The company’s other major shareholders are General Enterprise Management Services International Ltd (GEMS), Communication Venture Partners and Trilogy International Partners. Together this group of specialist investors provide extensive international telecommunications start-up experience and resources to ensure that NZ Communications has the investment and expertise it needs to successfully establish New Zealand’s third mobile network in 2009.
The multiple issues associated with high MTRs were recognized by the Commerce Commission on 6 November 2008 when it gave notice that it was commencing a formal investigation into the matter. It also stated that it would look at potentially anti-competitive on-net discounting practices and invited Voluntary Undertakings from industry that might avoid lengthy and expensive regulatory intervention.
NZ Communication’s Voluntary Undertaking also proposes that on-net retail price discount offers are extended to include calls / texts to any network.
NZC to Commerce Commission, Voluntary Undertaking cover letter 22 December 2008
NZC Voluntary Undertaking 22 December 2008
Issued by: Bryony Hilless Head of Corporate Communications NZ Communications Ltd T: +64-9-919 7045 E: bryony.hilless@nzcomms.co.nz
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