ComCom asks Minister to 'consider' the Vodafone Talk Add-on when thinking of MTR

Forums › ICT Policies and Regulation › ComCom asks Minister to 'consider' the Vodafone Talk Add-on when thinking of MTR

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#320770 20-Apr-2010 17:22

pwner: The issue with MTR fees is that they will naturally form a baseline price for calls between networks. yes you might have some sort of bundle that will allow you to get calls bellow cost due to making up revenue from some other stream. But if network A has to pay 12c per min to terminate calls on network B they will never have a casual retail rate bellow 12c per min otherwise it would be very easy for someone from network B to very legally make alot of continuous phone calls from a network A mobile they purchased to a number in their own network B and therefore gain alot of income and financially cripple its competitor.

This is most certainly not the case. $10 TXT and Non Stop TXT has been all the proof you need of this. Telecom are paying Vodafone somewhere in the vicinity of 9c per SMS to terminate these messages, on paper many of these customers are delivering them a net loss.

I used to get unlimited offpeak calling to any mobile or landline on my Vodafone mobile for $19.95 per month, this would have also lost the company money when MTR's were well over 30cpm.

The whole argument about it being a benchmark that pricing can't drop below is flawed.

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pwner

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#320774 20-Apr-2010 17:32

sbiddle:
pwner: The issue with MTR fees is that they will naturally form a baseline price for calls between networks. yes you might have some sort of bundle that will allow you to get calls bellow cost due to making up revenue from some other stream. But if network A has to pay 12c per min to terminate calls on network B they will never have a casual retail rate bellow 12c per min otherwise it would be very easy for someone from network B to very legally make alot of continuous phone calls from a network A mobile they purchased to a number in their own network B and therefore gain alot of income and financially cripple its competitor.

This is most certainly not the case. $10 TXT and Non Stop TXT has been all the proof you need of this. Telecom are paying Vodafone somewhere in the vicinity of 9c per SMS to terminate these messages, on paper many of these customers are delivering them a net loss.

I used to get unlimited offpeak calling to any mobile or landline on my Vodafone mobile for $19.95 per month, this would have also lost the company money when MTR's were well over 30cpm.

The whole argument about it being a benchmark that pricing can't drop below is flawed.

I did mention that i excluded bundle pricing from my arguement due to that fact, and you can obviously include contract bundles in that as well. I am looking at the one off retail cost of a SMS or Voice minute will with 99.999999999999% certainty be greater than or equal to the MTR fee set by the terminating network.

Bundles are designed to give the network a guaranteed income and also generally either encourage useage of the phone overall or the fact people will generally only use a % often very small % of their bundle so while they think they are getting alot of value they are often making a saving of ~20-30% which of course is good but still no where near the 200%+ discount they may think they are getting.

A good example of another revenue stream is that by having alot of customers even if they only use $10TXT or a plan like that is that they will get a large number of incomming calls which at 17c a minute MTR rate will create a seperate revenue stream for the network.

If i could get the other companies to connect to my Acme phone company and i charged $1,000 per minute as my MTR, which i am allowed to set. Telecom and Vodafone would definately not allow you to call one of my Acme customers for 89c per min. if they did i would set this up tomorrow and be a very rich man!

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#323395 27-Apr-2010 09:05

And it rolls out:

Commerce Commission asked to reconsider mobile termination

Communications and Information Technology Minister Steven Joyce has asked the Commerce Commission to reconsider its recommendation on mobile termination access services.

On 22 February 2010, the Minister received the Commission’s final report on mobile termination access services. In that report, the Commission recommended the Minister accept the offers put forward by Telecom and Vodafone in lieu of regulation.

“In a letter to me dated 19 April 2010, the Commerce Commission indicated that a new retail offer launched by Vodafone on 13 April 2010 may be material and may have the potential to affect the basis for the Commission’s recommendation,” says Mr Joyce.

“Under Section 19 of the Telecommunications Act I am required to make the decision that best gives, or is likely to best give, effect to the purpose of the Act – that is to promote competition in the telecommunications market to the long-term benefit of end-users of telecommunications services,” said Mr Joyce. “I consider that requiring reconsideration in these circumstances meets this test.”

“I would like the Commission to consider any relevant retail offers released since their report was sent or that may be released before they finalise their reconsidered advice, and the implications (if any) that those offers have on the recommendation that I accept undertakings put forward by Telecom and Vodafone.”

“While the Telecommunications Act does not require the Commission to report back to me within a specified timeframe, I am keen to see decisions around mobile termination access services made as soon as is practicable and appropriate.”

The Commission's processes are set out in Schedule 3 of the Telecommunications Act.

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wreck90

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#323406 27-Apr-2010 09:19

So, what is a MTR?

My understanding, it is the charge incurred when a mobile phone subscriber calls someone on another network.

eg, if the MTR between vodafone and telecom is 0.10/min then a telecom subscriber calling a vodafone subscriber will result in a bill from vodafone to telecom of 0.10 /min.

Is this wrong? Or do the telcos make internal arrangements to bypass the official MTR's? ie, scratch my back and I'll scratch yours.

jointhedebate

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#323409 27-Apr-2010 09:26

Everything you could ever hope to read about MTRs is on our blog: www.geekzone.co.nz/jointhedebate .

But in essence, an MTR is a way of sharing revenue one provider earns to cover costs both providers have.

I call you - I'm on a landline and you're on a mobile. I pay my landline provider a fee for that call, but you don't pay your mobile company anything to receive it. Yet the cost of that call is split 50:50 between providers.

Rather than the mobile company tell the landline company that it can't connect that call (that benefits nobody) the mobile company and landline company agree to share some of the revenue for terminating that call. It's the MTR.

Cheers

Paul

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#323513 27-Apr-2010 12:06

And the follow up press release from 2degrees:

2degrees welcomes Minister’s call for reconsideration of mobile termination fees

2degrees welcomes the announcement today by the Minister for Telecommunications, Steven Joyce, that the Commerce Commission should reconsider its recommendation to impose above cost Mobile Termination Rates (MTRs) in light of recent market changes.

MTRs are the ‘toll charges’ paid by telephone companies to connect calls to mobile networks, and New Zealand has some of the most expensive in the world. The Commerce Commission’s investigation into the possible regulation of MTRs has been ongoing since May 2008.

2degrees Chief Operating Officer, Bill McCabe, says “Clearly this is a complex issue, however recent retail offers have undermined the basis of the Commission’s recommendation. The Minister is right to request that it reconsiders its views.

“The voluntary undertakings were supposed to represent the best commercial offers from the large mobile operators as an alternative to regulation but as soon as the Commission had recommended these rates to the Minister, Vodafone then started offering much lower rates for on-net calls to its own retail customers. That is the major cause for the Minister’s concern as discriminatory pricing is accepted worldwide as a significant barrier to competition. The Commission must feel gamed by the incumbent operator.

“The Commission’s task is now simple. If the basis for their initial recommendation is now flawed, then it must recommend regulating these access prices to cost as already supported by Commissioner Mazzoleni and consistent with international best practice – MTRs are regulated everywhere else in the world. It should be able to provide the Minister with a new recommendation within days rather than weeks. Delay merely plays into the hands of the incumbents and we are encouraged that the Minister has asked for a decision as soon as possible.

“Lower termination rates mean lower prices for consumers and more competition. That’s why they are tumbling fast around the world. Only last month the UK regulatory authority, Ofcom, announced plans to cut rates in the UK to about 1c by 2014, which is around 1/6 the rate proposed by the New Zealand incumbents.”

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ajw

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#323798 27-Apr-2010 17:56

After all these years hopefully we have regulators and Politicians with balls that won't be bullied by corporations. It is hoped that the Commerce Commission and Minister Joyce make timely decisions for the betterment of the mobile consumer.

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#323810 27-Apr-2010 18:33

And another update:

The Commerce Commission has today released a letter outlining its indicative process and timeline to reconsider its recommendation in the mobile termination access services investigation that undertakings from Telecom and Vodafone should be accepted as an alternative to regulation. The Commission expects to complete the reconsideration process by early June 2010.

The Commission is undertaking this process following a request from the Minister for Communications and Information Technology under the Telecommunications Act 2001that the Commission reconsider its recommendation.

The Minister has requested that the Commission consider the implications, if any, of any relevant retail offers on the Commission’s recommendation that the Minister accept the undertakings put forward by Telecom and Vodafone. Retail offers to be considered are those that have been released since the Commission sent its report to the Minister on 22 February 2010, or that may be released before the Commission finalises its reconsidered recommendation.

“Given the limited focus of the reconsideration, the Commission expects to be able to complete the reconsideration process by early June 2010,” said Telecommunications Commissioner Dr Ross Patterson.
“The Commission will issue a Draft Reconsideration Report and provide interested parties with an opportunity to submit on that report, before the Commission reports back to the Minister,” said Dr Patterson.

The Minister’s reconsideration request letter, the Commission’s letter outlining the reconsideration process and related correspondence between the Minister and the Commission, and associated documents are all available on the Commission’s website at www.comcom.govt.nz/mobiletomobiletermination/

Indicative Timeline for Reconsideration Process

Minister requests reconsideration 26 April 2010
Commission advises interested parties of process and indicative timeline for reconsideration 27 April 2010
Deadline for interested parties to submit any relevant information for Commission consideration 5pm 3 May 2010
Draft Reconsideration Report released 12 May 2010
Submissions on Draft Reconsideration Report due 5pm 19 May 2010
Cross-submissions due 5pm 26 May 2010
Final Reconsideration Report delivered to Minister Early June 2010

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)(b) of Schedule 3 of the Act, the Minister can require the Commission to reconsider its recommendation or any aspect of its recommendation, 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.

On 22 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”.

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NonprayingMantis

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#324053 28-Apr-2010 09:45

ajw: After all these years hopefully we have regulators and Politicians with balls that won't be bullied by corporations. It is hoped that the Commerce Commission and Minister Joyce make timely decisions for the betterment of the mobile consumer.

Yes, I’m sure telecom really bullied the government into putting in operational separation and unbundling.

It only wiped about $2bn off their market cap the day it was announced, and has cost them hundreds of millions of dollars in compliance since then.

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#324298 28-Apr-2010 16:28

NonprayingMantis:
ajw: After all these years hopefully we have regulators and Politicians with balls that won't be bullied by corporations. It is hoped that the Commerce Commission and Minister Joyce make timely decisions for the betterment of the mobile consumer.

Yes, I’m sure telecom really bullied the government into putting in operational separation and unbundling.

It only wiped about $2bn off their market cap the day it was announced, and has cost them hundreds of millions of dollars in compliance since then.

I did say for the betterment of the mobile consumer. I was not refering to Telecom's fixed line network.

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#324491 29-Apr-2010 00:53

so maybe you can explain then how it is that Telecom is powerful enough to bully the government over MTRs to that extent, but failed miserably in bullying them about all the fixed line stuff that has happened (and is still happening e.g. the RBI)

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#326550 4-May-2010 16:56

NonprayingMantis: so maybe you can explain then how it is that Telecom is powerful enough to bully the government over MTRs to that extent, but failed miserably in bullying them about all the fixed line stuff that has happened (and is still happening e.g. the RBI)

Pre-regulation Messrs Deane and Gattung screwed customers for years. Are you saying you still prefer to pay high prices. Telecom never did anybody any favours.

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#326705 5-May-2010 00:36

ajw:
NonprayingMantis: so maybe you can explain then how it is that Telecom is powerful enough to bully the government over MTRs to that extent, but failed miserably in bullying them about all the fixed line stuff that has happened (and is still happening e.g. the RBI)

Pre-regulation Messrs Deane and Gattung screwed customers for years. Are you saying you still prefer to pay high prices. Telecom never did anybody any favours.

what does pre-regulation have to do with anything? we have been in the strict regulatory environment for some years now.

To think that the government has been bullied over the last few years by telecom is just silly, as demonstrated by the raft of regulatory things that have happened over that period, wiping billions of the shareprice, and are still happening today. (starting with unbundling and opsep under labour, and currently the removal of the TSO payments (but not the requirements) and introduction of the rural broadband tax under National).

To think that Telecom has the sort of bullying influence with the government seems laughable to me - if they do have that influence then they sure as heck have been getting the govenrment to do things that screw them over..

ajw

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#326971 5-May-2010 16:47

NonprayingMantis:
ajw:
NonprayingMantis: so maybe you can explain then how it is that Telecom is powerful enough to bully the government over MTRs to that extent, but failed miserably in bullying them about all the fixed line stuff that has happened (and is still happening e.g. the RBI)

Pre-regulation Messrs Deane and Gattung screwed customers for years. Are you saying you still prefer to pay high prices. Telecom never did anybody any favours.

what does pre-regulation have to do with anything? we have been in the strict regulatory environment for some years now.

To think that the government has been bullied over the last few years by telecom is just silly, as demonstrated by the raft of regulatory things that have happened over that period, wiping billions of the shareprice, and are still happening today. (starting with unbundling and opsep under labour, and currently the removal of the TSO payments (but not the requirements) and introduction of the rural broadband tax under National).

To think that Telecom has the sort of bullying influence with the government seems laughable to me - if they do have that influence then they sure as heck have been getting the govenrment to do things that screw them over..

Surely a no brainer as to why Telecom was regulated.

"On service pricing:
What has every telco in the world done in the past? It's used confusion as its chief marketing tool ... customers know that's what the game has been. They know we're not being straight up." - Theresa Gattung

[Moderator edit (MF): Removed entire article quote. Please do not quote entire articles if you do not hold copyright]

NonprayingMantis

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#326979 5-May-2010 17:13

that just proves my point. Telecom could *not* fight off regulation, ergo they are *not* the all powerful company you think they are, and have not been since at least the time unbundling was announced.

"Gattung also said that contrary to what the media was reporting, the unbundling of Telecom's local loop was far from a done deal. She also doubted the Government would take any serious action against Telecom."

but they *did*... wich proves telecom wasn't as powerful as you are claiming.

why did you post something that refutes your own point?

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