Mobile Termination Rates Media Conference

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Ultimate Geek
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# 249116 20-Aug-2009 17:09

Screeb:
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?

Not at all. Just because NZer's talk less on mobiles doesn't mean it's neccessarily more expensive. It may just mean.....they talk less on mobiles.

Just because NZer's eat less Big Mac's than Americans does that mean Big Mac's are more expensive here? Just because NZer's drink less red wine than Italians does that mean red wine is more expensive here?

Does 2Degress have an ulterior motive to try and make kiwis think they're getting "ripped off"? Of course they do.

Your mother was a hamster and your father smelled of elderberries

ockel

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Uber Geek
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# 249119 20-Aug-2009 17:12

Screeb:
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.

As per BiggusDoggus I'm noting that you're significantly misquoting the OECD statistics and the interpretation therein. The $31/mth refers to a basket of calls not the average calls made by a NZ mobile user.
To enable comparisons between countries the Teligen theoretical baskets (low, medium. high) for both mobile and landline users are constructed based on tariffs charged by operators.

Despite TUANZ claiming that the OECD data isnt reliable but often quotes the ComCom reports (using the same methodology) claiming prices are too high is highly hypocritical.

Using average usage and average spend (from completely different sources) suggests that perhaps you didnt understand how the OECD numbers are derived. I was trying to help point you in the right direction to gain perspective on the matter.

Screeb

671 posts

Ultimate Geek
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# 249135 20-Aug-2009 17:45

BiggusDoggus:
Not at all. Just because NZer's talk less on mobiles doesn't mean it's neccessarily more expensive. It may just mean.....they talk less on mobiles.

Just because NZer's eat less Big Mac's than Americans does that mean Big Mac's are more expensive here? Just because NZer's drink less red wine than Italians does that mean red wine is more expensive here?

Care to show how NZ isn't getting ripped off then?

Does 2Degress have an ulterior motive to try and make kiwis think they're getting "ripped off"? Of course they do.

So? 2degrees isn't the only group saying that we're getting ripped off. Commerce Commission for one...

ockel:
As per BiggusDoggus I'm noting that you're significantly misquoting the OECD statistics and the interpretation therein. The $31/mth refers to a basket of calls not the average calls made by a NZ mobile user.
To enable comparisons between countries the Teligen theoretical baskets (low, medium. high) for both mobile and landline users are constructed based on tariffs charged by operators.

[...]

Using average usage and average spend (from completely different sources) suggests that perhaps you didnt understand how the OECD numbers are derived. I was trying to help point you in the right direction to gain perspective on the matter.

Tell me then - how do YOU interpret the OECD statistics?

Despite TUANZ claiming that the OECD data isnt reliable but often quotes the ComCom reports (using the same methodology) claiming prices are too high is highly hypocritical.

Statistics is statistics. It's up to others to figure out what they mean. The OECD offers their own interpretation, but what most people see is the raw statistics and interpretations by others. People interperet different OECD statistics in different ways, and TUANZ is saying that in this situation, the OECD statistics are being interpreted poorly. And they're not the only ones - I just found these while looking for more statistics: http://www.glgroup.com/News/Misleading-International-Mobile-Price-Comparisons-42414.html
http://www.fiercewireless.com/press-releases/ctia-responds-oecd-communications-outlook-report-usage-and-cost-mobile-phone-calls

VFNZPaulBrislen

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Ultimate Geek

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Vodafone

# 249157 20-Aug-2009 18:47

The US argument in your second link is the one Vodafone NZ used to argue several years ago - that the arbitrary nature of the baskets distorts the local results.

We discussed this with the OECD and the Commerce Commission at the time. The argument was that nobody in NZ fitted the large basket user category and that we really needed a lower than the low user basket. The reason being the TSO distorts calling in NZ (how many of you look up a phone number on your mobile and then call it from your landline?).

The response, from the ComCom and from TUANZ, was simple: the OECD stats are what they are, get over it. They are sacrosanct and are not to be questioned.

This position applied right up to the point where Vodafone's Base plans were accepted by the OECD at which point the Commerce Commission began rejecting them for a variety of reasons (no handset subsidy; didn't like the term of the contract; no international roaming) none of which were applied to the other countries.

One by one we responded to all those reasons and fixed them and now, finally, many years later, the Base plans (now the Easy plans) are acknowledged by the Commerce Commission as being acceptable.

So instead it now looks only at the prepay figures from the OECD.

This is irksome, to put it mildly.

If it were up to me I'd probably say something like "I think they've already made their mind up and are just looking for an excuse to regulate" but that certainly wouldn't be a Vodafone point of view.

Cheers

Paul

Paul Brislen
Head of Corporate Communications
Vodafone

http://forum.vodafone.co.nz

Screeb

671 posts

Ultimate Geek
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# 249161 20-Aug-2009 19:19

PaulBrislen:
If it were up to me I'd probably say something like "I think they've already made their mind up and are just looking for an excuse to regulate" but that certainly wouldn't be a Vodafone point of view.

Why would they want to regulate if there's no need? Do the Commission members get bonus pay for every sector they successfully regulate? They have no ulterior motive. They don't stand to gain or lose anything either way. Two certain mobile operators however, have much to gain or lose. Now, which is more likely to give a biased argument...

VFNZPaulBrislen

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Ultimate Geek

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Vodafone

# 249172 20-Aug-2009 19:56

It's a rare regulator who says "No, actually everything's fine in this sector and we don't have to do a thing. In fact, why not lay some of us off. We think it's all tickety boo thanks".

Regulators regulate. It's what they do.

Paul Brislen
Head of Corporate Communications
Vodafone

http://forum.vodafone.co.nz

Screeb

671 posts

Ultimate Geek
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# 249178 20-Aug-2009 20:07

So why then are they not regulating every single sector in the country, claiming high prices and low competition everywhere?

Also, it's an even rarer for-profit incumbent who claims their prices are fine and that competition is healthy ;)

VFNZPaulBrislen

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Ultimate Geek

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Vodafone

# 249183 20-Aug-2009 20:24

If I can just steer this back on track...

The Commission's model looks only at one aspect of termination: fixed to mobile.

There's no assessment of the mobile to mobile market.

There's no assessment of the TXT message market.

And yet the Commission's draft report recommends regulating all three sectors.

If they've got no proof it's basically back to Ernie at TUANZ's point of view which seems to be "Stop whining, we're going to regulate you regardless of the facts".

I'm just not sure that's a sensible approach to take.

Surely if it's so obvious that there's a problem there should be some evidence? Some kind of cost model that will give the Commission the ammo to say "the problem is this, the solution is that. We recommend that."

Or am I asking too much?

Paul Brislen
Head of Corporate Communications
Vodafone

http://forum.vodafone.co.nz

Screeb

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Ultimate Geek
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# 249186 20-Aug-2009 20:42

I know this has little if anything to do with mobile termination rates, but it raises questions about the previous level of mobile competition: Why is it that 2degrees is able to offer rates that are less than half of what I'm currently paying on Vodafone prepay? (I will be switching as soon as I get my new sim - sorry Paul) In other words, why haven't Vodafone or Telecom previously offered me casual prepay calls at 44c/min and 9c TXTs? If it's economically viable for 2degrees to offer it, then why couldn't Vodafone and Telecom? The obvious answer is that they weren't/aren't competing on that "plan" (or lack thereof), which strongly suggests a lack of competition (at least in that area). You don't need a report to come to that conclusion. Some things are just self-evident.

Screeb

671 posts

Ultimate Geek
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# 249197 20-Aug-2009 21:05

And a bit more on topic: Paul, why is Telecom so concerned with termination charges being lowered so drastically? Vodafone's public position on the matter is obvious - they're getting ~$100 million a year in MTR charges from Telecom. Hey, free money! But Telecom seemingly has no reason - after all, I'm sure they don't like giving away $100m a year to their "competitor". Of course, we all know the true reason both companies don't want the rates lowered - which leads me to: Why isn't Vodafone saying anything about MTRs being a barrier to entry? Instead, you insist on talking about pass-through, which is really besides the point.

BiggusDoggus

346 posts

Ultimate Geek
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# 249199 20-Aug-2009 21:06

Screeb:
BiggusDoggus:
Not at all. Just because NZer's talk less on mobiles doesn't mean it's neccessarily more expensive. It may just mean.....they talk less on mobiles.

Just because NZer's eat less Big Mac's than Americans does that mean Big Mac's are more expensive here? Just because NZer's drink less red wine than Italians does that mean red wine is more expensive here?

Care to show how NZ isn't getting ripped off then?

My pleasure (at the risk of repeating myself).

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

Your mother was a hamster and your father smelled of elderberries

nzbnw

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Spark

# 249204 20-Aug-2009 21:13

Screeb: And a bit more on topic: Paul, why is Telecom so concerned with termination charges being lowered so drastically? Vodafone's public position on the matter is obvious - they're getting ~$100 million a year in MTR charges from Telecom. Hey, free money! But Telecom seemingly has no reason - after all, I'm sure they don't like giving away $100m a year to their "competitor". Of course, we all know the true reason both companies don't want the rates lowered - which leads me to: Why isn't Vodafone saying anything about MTRs being a barrier to entry? Instead, you insist on talking about pass-through, which is really besides the point.

What the?

If VF pays Telecom $100M in termination and in a simplistic world, Telecom pays VF $100M, how much money changes hands? No free money at all.

Pass through is absolutely relevant, as shown above you can set the termination rates at whatever level you like, $1 per minute for all anyone cares as long as each network is paying each other a similar figure in termination rates. Lowering the rates won't achieve anything without a guarantee these reductions will flow through in the retail market.

Well that’s my simplistic personal view anyway.

nzbnw

Screeb

671 posts

Ultimate Geek
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# 249212 20-Aug-2009 21:31

BiggusDoggus:
My pleasure (at the risk of repeating myself).
http://www.stuff.co.nz/business/industries/2750833/OECD-figures-make-mobile-rates-look-good

And in reference to what you said before:

Just because NZer's talk less on mobiles doesn't mean it's neccessarily more expensive. It may just mean.....they talk less on mobiles.

Just because NZers pay less per month for mobiles doesn't mean it's neccessarily less expensive. It may just mean.....they talk less on mobiles.

nzbnw:
What the?

If VF pays Telecom $100M in termination and in a simplistic world, Telecom pays VF $100M, how much money changes hands? No free money at all.

Pass through is absolutely relevant, as shown above you can set the termination rates at whatever level you like, $1 per minute for all anyone cares as long as each network is paying each other a similar figure in termination rates. Lowering the rates won't achieve anything without a guarantee these reductions will flow through in the retail market.

Well that’s my simplistic personal view anyway.

nzbnw

Sorry to say, but your "simplistic personal view" is wrong. Vodafone and Telecom don't end up paying each other the same amount. Vodafone get a "profit" of $100M after all the termination charges change hands at the end of the day. For example Vodafone may give Telecom $1B, and Telecom may give Vodafone $1.1B, resulting in Vodafone coming away with $100M. (see here for $100M figure)

So in general, MTR rates are not symmetrical at the end of the day, which is bad news for new entrants (which is why 2degrees wants them lowered, and Vodafone and Telecom don't).

nzbnw

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Spark

# 249213 20-Aug-2009 21:41

I know there will be a balance to pay, what your article does not say is how much VF pay Telecom, nor does it say that $100 million is the difference between the two payments.

I still stand by my comments and Pauls view that pass-through is critical.

nzbnw

Screeb

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Ultimate Geek
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# 249221 20-Aug-2009 22:03

nzbnw: I know there will be a balance to pay, what your article does not say is how much VF pay Telecom, nor does it say that $100 million is the difference between the two payments.

I still stand by my comments and Pauls view that pass-through is critical.

nzbnw

Nope, sorry:

Telecom pays Vodafone $100 million in mobile termination rates each year but that it doesn’t make a fuss because it shuts out competition such as 2degrees.

(from previous article)

Many billions of dollars each year get charged backwards and forwards but the net effect, we think, is that Telecom pays Vodafone over $100 million a year. And that reveals the truth about mobile termination rates. They aren't about efficient pricing or even raising revenue for the big two. Their main effect is to try to keep new providers out of the market. That's because, when a new entrant emerges, most of its customers will have to call or text friends on the old networks - so the new entrants' prices have to be higher than they want them to be.

(from here)

Far, far more than $100 million in MTR is passed between them (on paper, of course).

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