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Vodafone NZ rails against reduced mobile termination prices

IT Policy - Regulation

Vodafone New Zealand - in stark contrast to Telecom NZ and 2Degrees - has branded as "extreme" the prices for the regulated mobile terminating access service (MTAS) announced by the Commerce Commission earlier today, which represent significant reduction on the prices New Zealand's mobile operators presently charge.

Vodafone said: "The Commerce Commission has taken an extreme view in its position on mobile termination rate regulation. http://www.itwire.com/it-policy-news/regulation/46941 [It] has taken arbitrary benchmark rates that are far below cost. The four cent per minute voice rate in New Zealand looks extreme in comparison to current termination rates in Australia at 10c and 11c in Europe.

"It is half the rate indicated by the only available estimate of cost in New Zealand which was provided to the Commission during the STD process. SMS is unregulated in most countries but the Commission has chosen to regulate and has set a cost which is around a third of our best estimate of cost."

Vodafone, however, has only itself to blame for the Commission's intervention. The Commission had taken a formal decision not to regulate, but changed its mind after Vodafone introduced a new tariff with a huge differential between on-net and off-net calling rates.

Telecom NZ's response to the pricing announcement, in contrast was very low key. Its statement opened by simply summarising the Commission's planned price reductions and continued "With the long-running mobile termination rate process complete, Telecom remains focused on bringing its customers great value products and services across the board."

Telecom Retail's chief executive, Alan Gourdie, said: "What is clear right now is that the mobile market in New Zealand today is more exciting and competitive than it's ever been, and customers have greater choice of prices, products and services."

New entrant 2degrees - for whom high MTAS prices represent a significant barrier to growing customer numbers from a small initial base - welcomed the decision with CEO Eric Hertz saying the reductions were fundamental to real price competition for consumers in the market. "Three years after we raised the issue we now have pricing that allows 2degrees to do even more for New Zealanders and make mobile," he said.

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