The Commerce Commission issued its preliminary views today on the regulation of calls and texts to mobile networks, known as the mobile termination access services. 

The Commission’s view is that wholesale price for voice calls to a mobile network should be set at a cost-based benchmark, starting at a rate of 4.6 cents per minute.

“The Commission recognises that this represents a substantial immediate reduction in the termination rate for voice calls, but believes that this is justified because of the unique market conditions in New Zealand, and is necessary to remove a significant, long-standing and growing barrier to efficient expansion by a small mobile network operator. The removal of this barrier will promote vigorous competition for the long-term benefit of consumers,” said Dr Ross Patterson, Telecommunications Commissioner. 

For text the Commission has adopted a bill and keep (zero charge) approach, in recognition of the fact that the cost of terminating text is low and inter-carrier traffic is fairly balanced.

The Commission will now seek submissions and cross-submissions on the draft determinations. Following submissions, the Commission will hold a conference with interested parties before releasing a final determination in March 2011. 

The Commission’s draft determination can be found on the Commission’s website under www.comcom.govt.nz/mobile-termination-access-services-std 

Background
Bill and keep. The OECD definition is “A pricing scheme for the two-way interconnection of two networks under which the reciprocal call termination charge is zero –that is, each network agrees to terminate calls from the other network at no charge.” This means that telecommunications networks recover their costs only from their own customers rather than from their competitors.

Timeline
On 4 August 2010 the Minister for Communications and Information Technology, Steven Joyce, announced that he had accepted the Commission’s recommendation to amend the Telecommunications Act 2001 to allow the regulation of mobile termination access services.The mobile termination access services were added to Schedule 1 of the Act as a result of the Telecommunications (Mobile Termination Access Services) Order 2010, which came into effect on 24 September 2010.

Subpart 2A of Part 2 of the Act specifies the process the Commission is required to follow in making a standard terms determination, which sets the terms on which a designated access or specified service must be supplied with reference to all access seekers and access providers of the service.

The draft determination released today sets out both the price and non-price terms for the services.

The non-price terms reflect the standard terms proposal submitted by Vodafone in November 2011 and submissions and cross-submissions made by telecommunications industry participants. 

Final standard terms determination to be released 31 March 2011