Mobile phone carriers duke it out over termination rates

Wednesday 29th July 2009

Telecom offered to cut mobile termination rates in the ongoing battle with the Commerce Commission over the charges.

The nation’s largest listed phone utility made the offer in its latest submission to the regulator, claiming its analysis underestimated the level of competition in the market.

Telecom said the cost of terminating calls from other networks had already fallen 46% in the past five years, and this increase to 56% over the next five years under its revised undertakings. It offered to cut rates starting at 15 cents per minute for voice calls to seven cents by 2015, with a flat rate of 3.5 cents for text messages.

Rival Vodafone New Zealand urged the regulator to abandon regulation in favour of finding a “commercial alternative.” It concurred with Telecom that termination costs had dropped off significantly in recent years, and was similarly critical of the Commission’s benchmarking process.

Vodafone said cutting termination rates could result in the introduction of minimum spend limits, and may discourage carriers from taking on low spending customers, resulting in the deprivation of several hundred thousand mobile phone users from the “services they rightly enjoy”.

Vodafone urged Two Degrees Mobile, the soon-to-be third competitor in the mobile market, to make public the terms and pricing of the mobile termination deal the companies agreed to, which Vodafone will offer new entrant to the market.

Two Degrees repeated its stance that the regulator should eliminate termination rates, and consider a bill-and-keep option, where networks agree to end calls from each other at no charge.

The regulator will prepare a final draft in September, with Communications Minister Steven Joyce to make the final decision on regulation of wholesale prices.

Businesswire.co.nz

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