Telecom and Vodafone try last ditch effort over mobile termination rates

Friday 2nd October 2009

Telecom Corp. and Vodafone New Zealand have offered deep discounts to mobile termination rates in a last ditch effort to try and convince the Commerce Commission against regulating prices.

The regulator’s deadline for revised undertakings closed today, and both of the country’s dominant mobile phone operators gave up more ground in the prices they charge to connect to a rival network. Telecom proposed cutting voice calls to 12 cents per minute from next year, falling to 7 cents by 2014. It offered to only charge for text messages that exceeds an agreed upon price plan. This would see it bill rivals 3 cents per text for 7% to 12% overage, rising to 8 cents above 12% overage.

Vodafone reiterated its preference for a market solution instead of regulation, and offered to cut termination rates for voice calls to 12 cents per minute in April next year, lowering them further to 3 cents by 2015. It proposed cutting its rate for text messaging to 1.2 cents per text.

Both telecommunications companies expressed their concern with mounting regulation from the commission, which is still considering whether to investigate mobile roaming services, including price, following the completion of its investigation into termination rates. The commission has previously said it wants termination rates on voice calls to come down immediately to 7.5 cents per minute, falling to 3.8 cents by 2015, and for text messages to decline to 3.8 cents per text decreasing to 0.5 cents by 2015.

“We remain disappointed and concerned that the investigation has undermined the regulatory certainty that was achieved under the MTR deeds agreed by Telecom and Vodafone with the government just two years ago,” said Telecom chief executive Paul Reynolds in a statement. “We continue to hold the view that New Zealand’s regulatory regime lags international best practice in several important areas.”

New entrant Two Degrees Mobile Ltd. reiterated its support for a bill-and-keep model for text messaging, and while it underlined its preference for this model in voice calls, it offered to reduce rates from 6.54 cents per minute this year to 3.45 cents in 2015.

The Commerce Commission will now prepare a final draft and Communications Minister Steven Joyce will make a decision on any regulation to wholesale prices.

Businesswire.co.nz

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