NZ telcos slash mobile termination to stave off regulation

Stuart Corner
Monday, 05 October 2009 02:27

IT Industry - Strategy

He added: "Vodafone does not expect there will be retail price reductions as a result of these changes or from the proposed regulation. Indeed, we expect low-spend prepay customers may be made worse off. Potential benefit for customers will only be delivered to fixed customers and even then only if fixed operators choose to pass on these savings to their customers. Vodafone intends to pass on these savings to its fixed calling customers and challenges other fixed operators to make similar commitments to back up their submissions to the Commission."

Telecom NZ said its submission would see mobile termination rates drop by 62 percent over five years for both mobile-to-mobile and fixed-to-mobile calls. "We have again taken the lead on this issue because our strong preference is to lead an industry-based outcome that can give certainty to the market," said CEO Paul Reynolds. "This would be in preference to regulatory intervention, with the significantly increased costs, the delay in the delivery in services, and the market uncertainty that would necessarily result from it."

According Reynolds, "This is an even deeper reduction of MTRs than was proposed in July, and we await the Commission's response to these undertakings. We believe that gaining industry agreement on this undertaking would meet the commission's objective of drastically reducing MTRs, while minimising the costs and uncertainty that would be generated by any further regulatory intervention."

Telecom has proposed mobile-to-mobile and fixed-to-mobile termination be charged at 12 cents for the first minute or part thereof and thereafter at the same rate but by the second, from 1 January 2010. After 1 July 2010 one second charging would apply for the entire duration of the call.

Reynolds added: "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." We continue to hold the view that New Zealand's regulatory regime lags international best practice in several important areas. The most obvious of these is the lack of any merits review process, which is holding the industry back and reducing investor confidence."