ComCom kicks Telecom, Vodafone to touch over termination rates

Tuesday 30th June 2009

The Commerce Commission has rejected the level of fees major telecommunications companies had proposed charging other carriers to terminate calls on their networks and recommended the prices be regulated.

In its draft recommendation, the regulator wants the wholesale rate providers charge for terminating calls from other fixed or mobile networks to be priced at or around cost. The Commission wants rates dropped to 7.2 cents per minute for mobile voice calls and 0.95 cents per text, with the rates reducing to 3.8 cents per minute and 0.5 cents per text by 2015.

The recommended prices “are significantly below the prices recently offered by Telecom and Vodafone in their undertakings, which simply continue with their current termination rates for voice,” said Commissioner Anita Mazzoleni. “Where wholesale services are priced at cost, consumers are expected to benefit from the resulting increase in competition, which in turn should lead to lower retail prices.”

Telecom and Vodafone NZ stuck to their guns in their undertakings on the regulator’s draft recommendation after similar numbers were knocked back in March. Vodafone offered rates starting at 15 cents per minute for voice calls, reducing to 11 cents, and for text calls starting at 9.5 cents and falling to 7 cents. Telecom proposed voice calls starting at 15 cents and falling to 10 cents, with a flat rate of 3.5 cents per SMS.

Two Degrees, the new mobile player set to enter the market some time this year, wanted to eliminate mobile termination rates by having the carrier pay for the call. The regulator has called for further submissions with the final draft to be prepared in September.

IT and Communications Minister Steven Joyce will make the final decision on any regulation to wholesale prices.

Shares in Telecom fell 2.2% to $2.68 in trading today.

In a separate statement, the regulator announced it would begin an investigation into whether regulation of national mobile roaming should include price.

“The Commission’s benchmarking for mobile termination is likely to inform its view on an appropriate price for national roaming in any Schedule 3 investigation,” Mazzoleni said.

The Commission plans to release a draft report in mid-October, with the investigation set to be completed by the end of February.

The regulator has been looking into whether there were reasonable grounds for an investigation since September after a request from the previous government.In March, the Commission recommended against price regulation for mobile roaming.

Businesswire.co.nz

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