Mobile Termination Rates Media Conference

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#246255 13-Aug-2009 20:16

sbiddle:
ajw:
sbiddle:
ajw: Funny how Vodafone got a Bill and Keep interconnection agreement with it's "Vodafone at Home" offering.
Seems to be a rule for Vodafone but shaft anybody else that even looks like the competition.

What's unusual about that?

BAK for Vodafone's At Home product is for interconnection of local calls. Local calls in NZ use the BAK model and have done for many years.

All call that originates from their cellphone network.

And for all intent purposes becomes a fixed wireless solution.

Calls are locked down to the a predetermined area (such as the users property) which offers the exact same limitations a fixed line product has.

The decoder box uses a SIM card doesn't it.

freitasm

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#246281 13-Aug-2009 21:06

It does use a SIM card but the service is fixed to a specific location.

Kyanar

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#246581 14-Aug-2009 14:39

ajw:
Wakey Wakey they haven't got a interconnect agreement on MTR's with Telecom have they. Da.

You're right, they don't. But they also won't let Vodafone disclose the agreement with them (which Vodafone wants to do) which would set their target price and probably get them a lot of support in their campaign to lower rates. In fact, I've never even heard of them entering into negotiations with Telecom. Have they even started talking?

Why are they so frightened of us finding out how much their interconnect with Vodafone is? Is it because they might lose support for dropping MTRs completely?

ajw

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#246677 14-Aug-2009 16:22

Kyanar:
ajw:
Wakey Wakey they haven't got a interconnect agreement on MTR's with Telecom have they. Da.

You're right, they don't. But they also won't let Vodafone disclose the agreement with them (which Vodafone wants to do) which would set their target price and probably get them a lot of support in their campaign to lower rates. In fact, I've never even heard of them entering into negotiations with Telecom. Have they even started talking?

Why are they so frightened of us finding out how much their interconnect with Vodafone is? Is it because they might lose support for dropping MTRs completely?

I think you will find it was the Commerce Commission who ordered this information to be witheld from the news media. You will also remember that the Commerce Commission were the ones who launched the latest investigation into mobile termination rates. I do not know why all the know all, conspiracy theorists out there blame 2 degrees

BiggusDoggus

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#248973 20-Aug-2009 11:26

I am normally a pretty mild mannered type of guy.

But this really got my bow tie all in a spin:

http://www.stuff.co.nz/business/industries/2750833/OECD-figures-make-mobile-rates-look-good

So let's see if I've got this straight. An OECD report shows New Zealand is performing badly in Broadband, and Ernie "I don't have a grudge" Newman jumps up and down and says the figures prove kiwis are being ripped off/have the worst Broadband service in thye world (aside from Somalia).

Yet when that same organisation produces a report saying kiwis pay amongst the lowest cellphone rates in the OECD, he says the figures are unreliable. WTF?

He then goes on to say the "Drop the Rate, Mate" campaign is based on customer's *perceptions* that they were paying too much. A perception based mainly on propaganda peddled by so called 'independant' organisations such as TUANZ. Which the OECD report has now shown to be false.

Ernie then says the OECD report is based on available plans, not what people pay.

Putting aside the fact that the OECD report on Broadband was also based on what plans were available, which he took as a perfectly acceptable measure, isn't what customers pay based on what plans are available? The more they use a mobile the more they pay??

Sorry, but those running the "Drop the Rate, Mate" campaign clearly believe that spending more than $5 a month on anything at all is a breach of their God-given right to be cheap sods. IMHO.

Rant over.

[Moderator edit (MF): removed personal attacks]

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#249035 20-Aug-2009 14:07

This is a release issued by Vodafone today:

Will fixed-only operators pass through MTR reductions?

New Zealanders are unlikely to see any savings provided by further MTR reductions.

Research from Auckland based analyst Covec shows pass-through rates among fixed-line only operators* currently sits at 30% - significantly less than the 85% used in the Commission’s cost benefit model. This is despite the market leaders, Telecom and Vodafone, passing through 100% of savings.

With this in mind, the Commerce Commission’s own model for determining the benefit of regulating mobile termination rates proves regulation won’t deliver the cost savings the Commission hopes for.

The Commission’s cost benefit model expects fixed-line operators will voluntarily pass on at least 85% of any rate reduction to customers but provides no explanation for this level of pass through.

Vodafone’s general manager for corporate affairs, Tom Chignell, says the Commission’s assumption that such high levels of savings would be passed on to consumers simply doesn’t stack up.

“In Europe the average pass-through rate is 50%. In the UK it’s 65% but even at these levels the Commission’s cost model does not deliver net savings to the consumer. If we look to Australia we find Telstra’s annual report shows a level of pass-through of only 16.6%. Telstra has also begun raising the price of calling a mobile.”

Reducing pass-through to only 30% means regulation not only wouldn’t benefit customers, but would cost up to $195m over five years.

“In New Zealand both Vodafone and Telecom have already committed to pass through 100% of the savings to customers. That commitment ends if the Commission regulates and yet the Commission is pressing ahead in the mistaken belief that businesses will simply pass any savings on to the customers when evidence from both New Zealand and overseas is that this simply will not happen.”

This is a key reason for the Australian Competition and Consumer Commission’s conclusion it will no longer reduce termination rates as the savings are simply not reaching the customers.

NOTE TO EDITORS:

*The fixed-line only operators include:

Orcon,
CallPlus,
WorldxChange
Woosh

as assessed by Covec in its “Further Analysis of FTM Pass-through” report, available from the Commerce Commission website (www.comcom.govt.nz).

Covec has access to information restricted from public view and its report says “a reasonable assumption for FTM pass-through under regulation is around 40%”.

Vodafone and Telecom signed a legally binding deed with the government to pass through every dollar of reduction in termination rates. That means a saving of $325m to New Zealand consumers over the extended duration of the Deed.

The Commerce Commission cost benefit model includes pass-through of 85% in 2011 rising to 100% by 2015.

If the pass-through rate falls to only 30% as it is today, the model returns a loss of between $173.2m and $195m over the five year period. The benefits of regulation are far outweighed by the detriments, according to the Commission’s own model.

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#249040 20-Aug-2009 14:13

And this is the response from TUANZ:

MORE SCARE TACTICS FROM VODAFONE

This morning’s statement predicting that consumers will not benefit from regulating of mobile termination rates (MTRs) is no more than another diversionary scare tactic from Vodafone’s international armoury, according to the Telecommunications Users Association (TUANZ.)

Vodafone claims to have drawn its conclusions from research into the extent to which overseas fixed line operators have passed on savings in MTRs to consumers.

“Vodafone is effectively saying that if the Commerce Commission and government go soft on regulating the extortionate charges Vodafone are imposing on calls they receive from other networks, they in turn will graciously agree to pass these partial savings on to consumers.

“Vodafone seems to be calling for a form of voluntary retail price control.

“TUANZ does not seek price control in retail telecommunications markets – and most certainly not at the cost of letting the dominant mobile operators fend off competition by continuing to charge up to ten times the real cost of receiving calls into their networks.

“We believe the correct way to deal with competition in network industries is to identify the entry barriers and natural bottlenecks, deal with these through orthodox regulatory processes, and allow the resulting competitive retail market find the best prices for users. That is precisely the process the Commerce Commission used to open up the fixed line market, and is currently going through for the mobile market.

“Vodafone’s throwing its weight around should neither deflect the Commission and government, nor confuse consumers.

“There is already significant competition for fixed line services across most of New Zealand and the prospect of more to come. TUANZ has no doubt whatsoever that if Vodafone fails to drop retail prices to reflect reduced MTRs, other phone companies will quickly set a lead and force Vodafone’s hand.”

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VFNZPaulBrislen

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#249047 20-Aug-2009 14:29

Ernie hasn't responded to the points we made so I'll have a go.

The Commerce Commission has one cost-benefit model on which its basing its decision around MTRs.

The model looks only at fixed to mobile pricing (the commission has no model for mobile to mobile or TXT rates).

The model is a simple Excel spreadsheet and allows you to change the parameters to see what will happen to the outcome.

The model assumes pass through to consumers will start at 85% and rise to 100% in 2015. No rationale is given for this number - it's just in the model.

If you replace 85% with 65% (the pass through rate in the UK) the model balances out (that is there's no net gain or loss in regulating versus not regulating).

If you replace 85% with anything less, there is a net loss if you regulate. That is, it will cost more to regulate than it will gain in benefit.

The average pass through rate in the UK is 65%. In Europe it's 50%. In Australia, Telstra has a pass through rate of just 16.6%.

What do the fixed line operators do with the extra money? They pocket it. Telstra has earned an estimated $700m in five years of rate reductions and in that time has put the price of making a call to a mobile up.

In New Zealand Vodafone and Telecom signed a Deed of Undertaking with the govt to reduce MTRs at a slower rate than the commission wanted BUT we agreed to pass 100% of the savings on to customers. And we have - $21m in the first 21 months.

The other fixed line telcos have not passed on 100%. They're not required to so they haven't. They've passed on an average of 30%.

If you put 30% in the Commission's model, the cost of regulation balloons out to $195m over a five year period with no gain for consumers at all.

That's my point - Ernie hasn't addressed it. Perhaps someone would like to ask the fixed-line telcos how much they will commit to pass through if MTRs are regulated.

Cheers

Paul

Paul Brislen
Head of Corporate Communications
Vodafone

http://forum.vodafone.co.nz

browned

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#249049 20-Aug-2009 14:30

BiggusDoggus: I am normally a pretty mild mannered type of guy.

But this really got my bow tie all in a spin:

Ernie then says the OECD report is based on available plans, not what people pay.

Putting aside the fact that the OECD report on Broadband was also based on what plans were available, which he took as a perfectly acceptable measure, isn't what customers pay based on what plans are available? The more they use a mobile the more they pay??

Sorry, but I disagree. with those running the "Drop the Rate, Mate" campaign. They clearly believe that spending more than $5 a month on anything at all is a breach of their God-given right to be cheap sods.

Rant over.
[Moderator edit (MF): removed personal attacks]

If the OECD report is based on plans than that would imply to me that...

30% of New Zealand's mobile connections are monthly plans....that could mean 70% of people on prepay are not being counted in this OECD review. We all know prepay rates are terrible.

NZ broadband plans arn't exactly shining lights of generosity. Most have data caps and rates for excess usage vary so how exactly do you really compare what people are paying? Telecom charge $69 per GB for overage on business plans, and (is it?) $20 per GB on home plans? Compare that to many other countries who have heavy usage policies but no set limits or data caps and you begin to see the broadband issues we have.

I think the drop the rate mate campaign may be more about making it easier for new players to enter the market and offer something worth while. 2Degrees has spent 9 years getting to were it is today and I really hope it works for them.

How long did it take for unbundling to have an impact on broadband rates. We can only hope that the new cabinetisation will not adversly affect unbundling. Competition is good. I was with slingshot and free downloads after 1am were dreadfully slow. Telecom's big time plan is pretty damn good in comparision so we have progress through competition.

cheers
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Screeb

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#249069 20-Aug-2009 15:18

BiggusDoggus: I am normally a pretty mild mannered type of guy.

But this really got my bow tie all in a spin:

http://www.stuff.co.nz/business/industries/2750833/OECD-figures-make-mobile-rates-look-good

So let's see if I've got this straight. An OECD report shows New Zealand is performing badly in Broadband, and Ernie "I don't have a grudge" Newman jumps up and down and says the figures prove kiwis are being ripped off/have the worst Broadband service in thye world (aside from Somalia).

Yet when that same organisation produces a report saying kiwis pay amongst the lowest cellphone rates in the OECD, he says the figures are unreliable. WTF?

He then goes on to say the "Drop the Rate, Mate" campaign is based on customer's *perceptions* that they were paying too much. A perception based mainly on propaganda peddled by so called 'independant' organisations such as TUANZ. Which the OECD report has now shown to be false.

Ernie then says the OECD report is based on available plans, not what people pay.

Putting aside the fact that the OECD report on Broadband was also based on what plans were available, which he took as a perfectly acceptable measure, isn't what customers pay based on what plans are available? The more they use a mobile the more they pay??

Sorry, but those running the "Drop the Rate, Mate" campaign clearly believe that spending more than $5 a month on anything at all is a breach of their God-given right to be cheap sods. IMHO.

Rant over.

[Moderator edit (MF): removed personal attacks]

Did you even read the article?

McCabe said New Zealand's mobile rates were excessively high, especially for calling, which meant Kiwis used on average 90 minutes of call time a month, compared with 190 minutes in Britain and nearly 800 minutes in the US.

The only reason our monthly cost is below OECD average is because we don't make many/long calls, which itself is because it's so expensive to call! Imagine a country with calling prices at $1000 per minute. Now obviously people in that country are NOT going to be making a lot of calls, so they might wind up near the top of the OECD for least spent on calls a month, because so few calls are made, yet we can clearly see that the cost is ridiculously high.

For NZ's average of $31 per month (from the article), we get 90 minutes on average of calls - that's $0.34 per minute on average. For the US, it's $79 for 800 minutes (and don't forget that many US plans come with heaps of data and texts too), which is $0.099 per minute, making NZ's cost 3.48 times more expensive than the US, despite the US having a "worse" ranking in that report (higher monthly cost).

BiggusDoggus

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#249080 20-Aug-2009 15:38

Screeb:
BiggusDoggus: I am normally a pretty mild mannered type of guy.

But this really got my bow tie all in a spin:

http://www.stuff.co.nz/business/industries/2750833/OECD-figures-make-mobile-rates-look-good

So let's see if I've got this straight. An OECD report shows New Zealand is performing badly in Broadband, and Ernie "I don't have a grudge" Newman jumps up and down and says the figures prove kiwis are being ripped off/have the worst Broadband service in thye world (aside from Somalia).

Yet when that same organisation produces a report saying kiwis pay amongst the lowest cellphone rates in the OECD, he says the figures are unreliable. WTF?

He then goes on to say the "Drop the Rate, Mate" campaign is based on customer's *perceptions* that they were paying too much. A perception based mainly on propaganda peddled by so called 'independant' organisations such as TUANZ. Which the OECD report has now shown to be false.

Ernie then says the OECD report is based on available plans, not what people pay.

Putting aside the fact that the OECD report on Broadband was also based on what plans were available, which he took as a perfectly acceptable measure, isn't what customers pay based on what plans are available? The more they use a mobile the more they pay??

Sorry, but those running the "Drop the Rate, Mate" campaign clearly believe that spending more than $5 a month on anything at all is a breach of their God-given right to be cheap sods. IMHO.

Rant over.

[Moderator edit (MF): removed personal attacks]

Did you even read the article?

McCabe said New Zealand's mobile rates were excessively high, especially for calling, which meant Kiwis used on average 90 minutes of call time a month, compared with 190 minutes in Britain and nearly 800 minutes in the US.

The only reason our monthly cost is below OECD average is because we don't make many/long calls, which itself is because it's so expensive to call! Imagine a country with calling prices at $1000 per minute. Now obviously people in that country are NOT going to be making a lot of calls, so they might wind up near the top of the OECD for least spent on calls a month, because so few calls are made, yet we can clearly see that the cost is ridiculously high.

For NZ's average of $31 per month (from the article), we get 90 minutes on average of calls - that's $0.34 per minute on average. For the US, it's $79 for 800 minutes (and don't forget that many US plans come with heaps of data and texts too), which is $0.099 per minute, making NZ's cost 3.48 times more expensive than the US, despite the US having a "worse" ranking in that report (higher monthly cost).

Yes I read the article.

The article does *not* say that NZer's pay $31 for 90 minutes, or the US pays $79 for 800 minutes. You have taken stats from one part of the article and combined them with a quote from 2Degrees (that's impartiality for you) and come up with your calculation.

Yes, the US is more expensive for a whole raft of reasons. Including the fact a lot of their apparently great value plans (which include heaps of data and texts etc etc) involve the *receiver* of the call or text being charged.

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#249087 20-Aug-2009 15:57

browned: I think the drop the rate mate campaign may be more about making it easier for new players to enter the market and offer something worth while. 2Degrees has spent 9 years getting to were it is today and I really hope it works for them.

One point worth noting is that in many countries newer operators (such as 3 and Meteor) typically have asymmetrical MTR rates. Their inbound MTR rates are higher than other operators.

I'd like to know that opinion 2degrees have on this. If they want the cost for fixed to mobile and mobile to mobile MTR's set at a lower rate do they believe this should also apply to them?

ockel

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#249101 20-Aug-2009 16:41

McCabe said New Zealand's mobile rates were excessively high, especially for calling, which meant Kiwis used on average 90 minutes of call time a month, compared with 190 minutes in Britain and nearly 800 minutes in the US.

The only reason our monthly cost is below OECD average is because we don't make many/long calls, which itself is because it's so expensive to call! Imagine a country with calling prices at $1000 per minute. Now obviously people in that country are NOT going to be making a lot of calls, so they might wind up near the top of the OECD for least spent on calls a month, because so few calls are made, yet we can clearly see that the cost is ridiculously high.

For NZ's average of $31 per month (from the article), we get 90 minutes on average of calls - that's $0.34 per minute on average. For the US, it's $79 for 800 minutes (and don't forget that many US plans come with heaps of data and texts too), which is $0.099 per minute, making NZ's cost 3.48 times more expensive than the US, despite the US having a "worse" ranking in that report (higher monthly cost).

The OECD measurement is based on a theoretical basket of calls (at different dayparts and different distances - local/national/ILD) including on-net and off-net calls/txts. The baskets are derived from Teligen and readily available for analysis by the public. The ComCom uses the Teligen baskets in its quarterly/annual reviews.

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Screeb

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#249109 20-Aug-2009 17:01

BiggusDoggus:
Yes I read the article.

The article does *not* say that NZer's pay $31 for 90 minutes, or the US pays $79 for 800 minutes. You have taken stats from one part of the article and combined them with a quote from 2Degrees (that's impartiality for you) and come up with your calculation.

Yes, the US is more expensive for a whole raft of reasons. Including the fact a lot of their apparently great value plans (which include heaps of data and texts etc etc) involve the *receiver* of the call or text being charged.

So your entire argument rests on 2degrees apparently flat out lying about NZ making far less calling minutes per month than other countries?

Screeb

698 posts

Ultimate Geek

#249110 20-Aug-2009 17:02

ockel:
The OECD measurement is based on a theoretical basket of calls (at different dayparts and different distances - local/national/ILD) including on-net and off-net calls/txts. The baskets are derived from Teligen and readily available for analysis by the public. The ComCom uses the Teligen baskets in its quarterly/annual reviews.

Yes, so? I don't get what you're trying to say.

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