Mobile Termination Rate Regulation 28.04.2011

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SteveON

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#82329 27-Apr-2011 10:14

Tomorrow could possibly be one of the most important days in the NZ Mobile market to date; as far as competition goes. I thought it would be a good opportunity to start a thread so we can speculate on the possible outcomes.

MTR is what telcos pay to terminate a call within another network and this price directly affects the retail price of mobile-mobile/fixed line-mobile calling. Some insiders argue that the price does not affect retail prices and companies like Vodafone, they argue that it will directly affect their revenue and may cause them to rethink their re-investment plans. I do agree to an extent about re-investment; in Australia VF has hit the crapper.

However I believe with high MTR/profit margins; has allowed the mobile providers to run their infrastructure in a less than economically efficient manner.

To keep up to date on MTR : http://www.comcom.govt.nz/mobile-termination-access-services-std

What do you think tomorrows decision will bring?
I believe that there may be a fairly soft approach to MTR regulation and it may be a sliding path that takes up to two years before we see the deep cuts we want today.

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#463102 27-Apr-2011 18:21

This has been pushed back to 5 May.

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sbiddle

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#463106 27-Apr-2011 18:30

2degrees have already said their prices won't change as a result of a drop in MTRs.

michaelmurfy

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#463110 27-Apr-2011 18:39

sbiddle: 2degrees have already said their prices won't change as a result of a drop in MTRs.

And to be honest, you will possibly find the other 2 won't either.

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ajw

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#463263 28-Apr-2011 09:51

sbiddle: 2degrees have already said their prices won't change as a result of a drop in MTRs.

Wait and see, until a final determination is released by the Commerce Commission nobody knows what termination rates are going to be cut by.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10721923

Prices do come down in other markets when wholesale termination rates are reduced.

Safaricom, Orange lose bid to stop reduction in mobile interconnection charges (Kenya)

On 04.27.11, In Mobile, By Editor

?Share

Safaricom and Orange Kenya have lost their bid to stop the reduction in mobile interconnection charges in June.

The fee is set to drop from US$0.02 per minute to US$0.01 in July and US$0.014 in July 2012. In February, Orange Kenya and Safaricom asked the government to put on hold for two years the annual reduction in interconnection charges that started in 2006, arguing that it would intensify the ongoing price war and hurt the operators’ profits, jeopardize job security and slow new investments.

This prompted the Prime Minister’s office to form a task force to determine whether to hold off revising the charges or let the cuts run as earlier set by the Communications Commission of Kenya (CCK).

The taskforce returned a verdict that charges should run their course. CCK Director-General Charles Njoroge has stated that nothing has changed and mobile termination rates were done through consultation and they shall remain as such. He added that the downward fall in the connection charges does imply that calling rates will fall, adding that tariffs are mainly influenced by market forces.

nigelj

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#465607 5-May-2011 09:37

Looks like it just got announced, Paul B (ex Vodafone) on Radio NZ now. Calling cut to 4c as of Apr next year, and texts cut to 0.06 cents...

Nice work by ComCom

2nd Source; http://www.comcom.govt.nz/mobile-termination-access-services-std

freitasm

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#465614 5-May-2011 09:47

Yep... Just received the press release:

The Commerce Commission today released its decision on mobile termination rates – the cost of carrying a text or call on another network. There will be significant reductions in the wholesale termination rates for mobile calls and text messages. As a result of competitive pressure, the Commission anticipates that these reductions in the wholesale rates will flow through to the prices paid by the 4.7 million mobile subscribers in New Zealand in the coming year.

Termination rates for calls will drop to less than 4 cents by 1 April 2012, with further reductions until 2014. Termination rates for text messages will drop to 0.06 cents from 6 May 2011.

“These changes are intended to address significant competition problems in the wholesale mobile market which have resulted in high retail prices - particularly for prepay customers - a low number of mobile calls and high rates of people switching networks, compared to other countries,” said Dr Ross Patterson, Telecommunications Commissioner.

“However, we continue to be concerned about the extent to which the price of calls and text messages between people on different networks are significantly higher than calls and text messages between people on the same network. These price differences create significant barriers for the new entry and growth of small mobile operators in the mobile market,” said Dr Patterson.

While the Commission expects reduction in wholesale termination rates for calls and text messages to resolve this problem, it will be monitoring this situation closely, including publishing monthly reports, and is prepared to move quickly to limit these price differences if required.

The graduated reduction in termination rates for calls will allow mobile providers time to adjust retail rates. In providing this graduated reduction, or glide path, the Commission has sought to balance the benefits for consumers in terms of lower prices, while allowing mobile providers time to adjust retail prices.

You can view the final MTAS determination on the Commission’s website at: www.comcom.govt.nz/mobile-termination-access-services-std

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old3eyes

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#465632 5-May-2011 10:10

nigelj: Looks like it just got announced, Paul B (ex Vodafone) on Radio NZ now. Calling cut to 4c as of Apr next year, and texts cut to 0.06 cents...

Nice work by ComCom

2nd Source; http://www.comcom.govt.nz/mobile-termination-access-services-std

So what does this mean for the actual end user?? Most likely nothing..

Regards,

Old3eyes

xlinknz

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#465643 5-May-2011 10:32

If MTR rates for txt are too drop from 9.5c to 0.6c tomorrow shouldn't I expect my txt cost to drop ?

What is the point of the MTR lowering if the public don't benefit ?!

Beccara

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#465644 5-May-2011 10:35

That must be a typo surely! But yes, Is there and legal obligation or binding comcom decision that will force the big 3 to drop retail rates?

Most problems are the result of previous solutions...

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freitasm

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#465645 5-May-2011 10:35

That's what Vodafone was saying before... And 2degrees plus TUANZ were hammering that lower MTR would produce lower costs for consumers. But Vodafone said (www.geekzone.co.nz/jointhedebate) that this wouldn't be the case.

Now, 2degrees has today told newspapers a lower MTR was required to "keep" the prices.

I guess we won't see anything cheaper in the near future.

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ajw

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#465647 5-May-2011 10:42

So New Zealand is a third world basket case in regards to mobile pricing and will continue to be so until prices are bought into line with other markets.

ABOVE: International Average Mobile Voice Usage per Month. Source: GSMA (click to zoom).
Again, the commission's report picks up on this theme, noting:
"Mobile voice traffic per subscriber in New Zealand still remains amongst the lowest in the world with New Zealanders making an average of 79 minutes of voice calls per month compared to 120 in Australia and 198 in the UK."
Indeed, New Zealand is near the bottom of the heap, along with the impoverished nations of Tanzania, Lesotho and Azerbaijan - indicating that all thought they've got cheaper, voice plans are still too expensive, disuading Kiwis from calling on their mobiles as much as those in other developed countries.

freitasm

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#465649 5-May-2011 10:46

Just received:

Minister welcomes Mobile Termination Rates decision

Communications and Information Technology Minister Steven Joyce welcomed the Commerce Commission’s final determination on Mobile Termination Access Services (MTAS) today.

“In August 2010 I accepted the Commerce Commission’s recommendation that MTAS should be regulated because I was satisfied that regulation would improve competition and lower prices to the long term benefit of end users”, says Mr Joyce.

“This process has been a long time in the making. I am pleased to see it come to a conclusion and I am confident that the Commission has reached a balanced and reasonable decision.”

“I look forward to the wholesale price reductions announced today being passed through to consumers and the continued development of a competitive mobile market in New Zealand.”

MTAS refers to the wholesale prices charged by a mobile network operator (such as Telecom, Vodafone and 2degrees) for providing services to customers from other network operators.

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ajw

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#465653 5-May-2011 10:52

Minister Stephen Joyce can wish all he likes for mobile price reductions but unfortunately the Telcoes aren't listening especially 2 degrees.

sep11guy

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#465665 5-May-2011 11:24

ajw:
So New Zealand is a third world basket case in regards to mobile pricing and will continue to be so until prices are bought into line with other markets.

ABOVE: International Average Mobile Voice Usage per Month. Source: GSMA (click to zoom).
Again, the commission's report picks up on this theme, noting:
"Mobile voice traffic per subscriber in New Zealand still remains amongst the lowest in the world with New Zealanders making an average of 79 minutes of voice calls per month compared to 120 in Australia and 198 in the UK."
Indeed, New Zealand is near the bottom of the heap, along with the impoverished nations of Tanzania, Lesotho and Azerbaijan - indicating that all thought they've got cheaper, voice plans are still too expensive, disuading Kiwis from calling on their mobiles as much as those in other developed countries.

I would like to give a different way of looking at this.

What about the whole point that the voice traffic is low BECAUSE the cost of calling is high. To put it simply, X makes 10 x 1min calls a month cuz it costs him 90c. It will cost him $9

But if the cost is 15c, He will be able to make 60 x 1min calls and obviously the traffic will increase. Now if this was the case, more number of people wont "think" before picking the phone.

Instead of a text people might call cause it will save all the going back and forth on texts and probably more time spent thinking-typing.

xlinknz

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#465666 5-May-2011 11:37

Well if no Telco's drop their rates what can I do ?

If 2degrees won't and VFNZ and or TCNZ do then that will put market pressure on 2degrees. If VFNZ do and 2degrees don't I'll change on principle away from 2degrees

Surely the govt will have to step in if it the Telco's don't drop their rates otherwise it makes a mockery of the regulation

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