Draft report on mobile roaming, co-location

Draft report issued on regulation of mobile roaming and co-location services

The Commerce Commission has issued its draft recommendations on whether to amend the roaming and co-location services currently regulated under the Telecommunications Act, or accept an undertaking from Vodafone as a suitable alternative to amending the regulations.

The Commission's draft recommendations are that the non-price terms of the national roaming service should be altered and that it should become a designated service, i.e. subject to price regulation. The Commission recommends that no change be made to the co-location service, but that the Telecommunications Carriers' Forum make changes to the Co-Location Code to provide a dispute resolution mechanism for replacement costs, as well as apportioning the costs of co-location based on space utilisation.

Roaming allows a network operator with limited coverage to roam on other networks to enable its customers to make and receive calls. It allows a new entrant to offer nationwide services while it builds its network. Co-location allows the mobile equipment of a network operator to be installed on another operator's tower. This can reduce the costs associated with the setting up of cell sites by sharing facilities between network operators.

Currently national roaming and co-location services are specified services, which means they are not subject to price regulation. In November last year the Commission began an investigation under Schedule 3 of the Telecommunications Act 2001 into whether to amend the terms of the roaming service, and to make roaming and co-location services subject to price regulation.

Telecommunications Commissioner Dr Ross Patterson says the Commission's view at this stage is that the proposed changes will enhance entry into the New Zealand mobile market.

"New Zealand and Slovakia are the only OECD countries which do not have three or more mobile operators. The recommendation to amend the roaming service in the Act is likely to facilitate new entry, which will lead to more competition, greater choice of provider, lower prices and more innovative products and services."

"With regard to co-location, the Commission considers that, at this stage, it is more appropriate to make enhancements to the Co-location Code and the Master Co-location Agreement rather than have the Commission set the price for the service," Dr Patterson said.

The Commission has assessed the undertaking from Vodafone as an alternative to regulation and notes that it is a marked improvement from the original undertaking. Although the pricing methodology for the roaming service in the amended undertaking may have some efficiency-enhancing characteristics, there remain a number of areas of uncertainty over the price terms and some of the non-price terms would not facilitate entry.

"The Commission's preliminary view is that the undertaking, in its current form, is not likely to promote entry into the New Zealand mobile market. However, if the concerns raised in the draft report are sufficiently addressed, the Commission may consider accepting the undertaking as a suitable alternative to regulation," Dr Patterson says.

Submissions on the draft report are being sought. The deadline for submissions is Friday 31 August 2007. The report is available on the Commission's web site www.comcom.govt.nz under IndustryRegulation/Telecommunications/Investigations/
Mobilemarket

Background

On 10 October 2006, the Commission announced that there are reasonable grounds to investigate:

 amending the terms of the national roaming service;
 moving the national roaming service from a specified to a designated service; and
 moving the co-location service from a specified to a designated service.

On 16 November 2006, the Commission formally commenced the investigations into whether or not to amend the terms of the current roaming and co-location services under Schedule 3 of the Telecommunications Act 2001.

An undertakings regime was incorporated in the Act via the amendments made on 22 December 2006 which allows a relevant access provider to submit, as an alternative to regulation, proposed terms and conditions of supply of a service that the Commission is proposing to regulate.

On 19 January 2007, the Commission received an application for an undertaking from Vodafone and sought input from interested parties. The Commission received submissions on the undertaking from interested parties on 13 March 2007.

In accordance with clause 16(3) of Schedule 3A of the Act, on 5 April 2007, the Commission provided Vodafone with its preliminary view of the undertaking application and gave Vodafone an opportunity to amend its undertaking in light of the submissions received.

On 22 May 2007, the Commission received an amended undertaking from Vodafone.

Telecommunications Commissioner. Dr Ross Patterson was appointed Telecommunications Commissioner for a five-year term beginning 12 July 2007. Dr Patterson is a New Zealand lawyer with a PhD in commercial law. For the last ten years he has been working in Sydney, Australia as a partner of Minter Ellison Lawyers, where he was head of the firm's competition and regulatory practice.

ENDS

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