Commerce Commission sets draft regulations on mobile termination rates
By Jason Krupp
Dec. 23 (BusinessDesk) - The Commerce Commission today released its preliminary draft regulations on mobile termination
access services, calling for lower wholesale voice and text pricing to encourage competition in New Zealand's cellular
market.
In a statement today the commission recommended wholesale pricing for voice calls to a mobile network should be set at a
cost-based benchmark, starting at a rate of 4.6 cents per minute.
For text it adopted a bill and keep, or zero charge, approach, citing the low cost of terminating texts and the balance
in inter-carrier traffic. That means that telecommunications networks recover their costs only from their own customers
rather than from their competitors.
Mobile termination rates are the fees telcos charge each other to terminate calls or texts originating from competitor
networks, and amount to millions of dollars in cross billing each year.
Competition concerns were stirred by the ability of major operators to offer heavily discounted pricing options to their
customers by stripping out the mobile termination fees, a pricing option not available to newcomers such as Two Degrees
Mobile Ltd. which does not own an extensive network or foothold in the market.
“The Commission recognises that this represents a substantial immediate reduction in the termination rate for voice
calls, but believes that this is justified because of the unique market conditions in New Zealand," said
Telecommunications Commissioner Ross Patterson.
The move is "necessary to remove a significant, long-standing and growing barrier to efficient expansion by a small
mobile network operator," he said. "The removal of this barrier will promote vigorous competition for the long-term
benefit of consumers.”
The draft regulations fly in the face of a voluntary reduction approach favoured by Telecom Corp. and Vodafone New
Zealand Ltd., the country's two biggest mobile operators, who claim the market is already competitive and price
regulation is unnecessary.
The commission said will now seek submissions and cross-submissions on the draft determinations, followed by a
conference with interested parties before releasing a final determination in March 2011.
(BusinessDesk)