ACCC enquiry could bring down cost of calls to mobiles

Stuart Corner
Wednesday, 15 June 2011 15:37

IT Policy - Regulation

The ACCC has initiated a public enquiry into the mobile terminating access service (MTAS) - the service provided by mobile network operators to terminate incoming calls to mobiles on their network - that could result in lower prices for calls to mobile services.

The service was declared by the ACCC in 2004, meaning it is subject to price regulation, and redeclared without change in 2009. The current declaration is due to expire on 30 June 2014.

Pricing for MTAS has long been a contentious issue with the operators repeatedly opposing ACCC decisions that have reduced the regulated price from over 21 cents per minute in 2004 to nine cents per minute in 2007, a price that the ACCC said was "a conservative upper bound estimate."

However what particularly frustrates the ACCC is that the price reductions it has pushed through over the past few years have not been reflected in reduced prices for calling mobiles from fixed phones.

It points out that from 1997 to 2010, the charge for PSTN terminating access (the equivalent service in the fixed network) declined by a factor of three, and retail prices for domestic calls dropped by 61.4 percent in real terms. In contrast, the MTAS rate has declined nearly fivefold in real terms since 1997, but the average retail price for fixed to mobile calls fell by only 52.9 percent.

Failure to pass through MTAS reductions also creates differentials between the on-net and off-net charges for calls between mobile phones, and this has been a particular bugbear for New Zealanders, many of whom have resorted to carrying two mobiles to avoid making off-net calls.

The New Zealand equivalent of the ACCC, the Commerce Commission had just recommended last year not to regulate MTAS pricing when Vodafone NZ introduced a new tariff with blatant discrimination between on-net and off-net call rates. This prompted the Commerce Commission to rescind its recommendation to the minister and to introduce regulated MTAS pricing,  much to the displeasure of Vodafone.

The ACCC has now issued a discussion paper that sets out a number of options for future regulation of MTAS and inviting submissions.

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