In response to a query from the Minister for Communications and Information Technology, the Commerce Commission has invited the Minister to consider the launch of Vodafone’s Talk Add-on product in his assessment of whether Telecom’s and Vodafone’s mobile termination access services (MTAS) undertakings should be accepted.

In February 2010 the Commission recommended that the Minister accept undertakings from Telecom and Vodafone as an alternative to regulation.

In April 2010 Vodafone launched a new Talk Add-on product offering up to 200 minutes to Vodafone New Zealand mobiles and landlines for $12 a month for certain pre-pay plans. This plan is promoted on Vodafone’s website as “just 6 cents a minute to Vodafone NZ mobiles and landlines in New Zealand”.

The Minister has requested the Commission’s view on whether Vodafone’s new on-net plan is material to concerns identified in the Commission’s final report relating to the issue of whether smaller operators could compete with Telecom’s and Vodafone’s on-net retail rates.

“Since becoming aware of the launch of Vodafone’s new Talk Add-on product last week, the Commission has reviewed the details of, and the type of market behaviour exhibited by, Vodafone’s new Talk Add-on product. The Commission’s initial view is that such a plan, and any market outcomes which may arise from it, may be material,” said Telecommunications Commissioner Dr Ross Patterson.

“Further, the Commission’s initial view is that such a plan may have the potential to affect the basis for the Commission’s recommendation in the final report. The Commission recommended acceptance of the final undertakings as an alternative to regulation on the basis that Telecom’s and Vodafone’s final undertakings would address the competition issues which the Commission identified throughout the MTAS investigation,” said Dr Patterson.

“The Commission has invited the Minister to take account of the Talk Add-on product in his assessment of whether Telecom’s and Vodafone’s final undertakings should be accepted, or whether it is appropriate to request the Commission to reconsider its recommendation in light of the potential impact of Vodafone’s new Talk Add-on product,” said Dr Patterson.

There will be no further comment from the Commission at this stage.

Background
Mobile termination prices are the wholesale charges mobile phone companies charge for terminating calls or texts from other fixed or mobile networks.

Undertakings. Under the Telecommunications Act 2001, parties can submit undertakings, which are an offer of terms and conditions for the supply of a service as an alternative to regulation.

Requirements of the Telecommunications Act. The Act requires that the Commission makes a recommendation which best promotes competition for the long-term benefit of end users.

Reconsideration of Commission’s recommendations. Under clause 6(2) of Schedule 3 of the Act, the Minister can require the Commission to reconsider its recommendations or any aspect of its recommendations, for any reasons specified by the Minister.

MTAS investigation. On 6 November 2008 the Commerce Commission commenced an investigation under Schedule 3 of the Act into mobile termination access services (MTAS). The MTAS incorporates mobile-to-mobile voice termination (MTM), fixed-to-mobile voice termination (FTM) and short-message service termination (SMS). The investigation considered whether these services should become regulated services under Schedule 1 of the Act.