I couldn’t believe my eyes when I read the Dominion Post this morning. According to our out of touch TUANZ CEO Ernie Newman some people are paying 71c per minute for calls from landlines to mobile phones and if you’re to believe Ernie this high cost is a direct result of both Telecom and Vodafone charging excessive rates for call termination.
Termination rates are a major component of retail fixed to mobile calls and a reason we are paying silly prices of 71c per minute for a call from home to a cellphone.
Excuse my language but what the hell are you smoking Ernie?
Both Vodafone and Telecom have cut their interconnection rates considerably over the past few years and the cost of calls from landlines to mobile phones has dropped for many users. The problem has nothing to do with interconnection rates, it’s solely a case of telcos making excessive retail margins on calls from landlines to mobile phones. There are plenty of providers now offering call rates from as low as 25c per minute upwards with many customers now paying somewhere between 30c – 35c per minute for calls. Why is it that Telecom still have a base rate of 71c per minute for calls to mobiles? When this rate was set in the late 80’s the term interconnection agreement didn’t exist as their where no other toll providers and it wasn’t until the mid 90’s that you were able to make non coded calls to mobile phones using a provider other than Telecom. Off the top of my head the interconnection rates were set at around 45c per minute at this time for both Telecom and BellSouth.
I’m sorry Ernie but you’re barking up the wrong tree here and so was the Commerce Commission when they tried to enforce lower interconnection rates. Unlike mobile networks in countries without calling party pays most mobile networks in countries with CPP regard this revenue stream as a very valuable source of income. Cut these interconnection rates and mobile operators simply gather that revenue from other parts of the business by way of higher costs for mobile originated calls so at the end of the day nobody really wins. While mobile operators were forced to cut their interconnection rates there is nobody out there forcing toll providers to cut their margins on calls to mobile phones which is the precise reason Telecom can still get away with charging 71c per minute to call a mobile. Don’t go blaming Vodafone for a problem that has nothing to do with them. Vodafone argued to the Commerce Commission that lowering interconnection rates wouldn’t necessarily result in those savings being passed on to the end consumer and it’s now obvious that this is precisely what has happened. Why not start targeting individual toll providers who are charging excessive rates and who haven’t reduced their rates despite paying lower wholesale prices? They truly are the cause of the problem.
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