Commerce Commission cuts mobile termination rates
The Commerce Commission today released its decision on mobile termination rates – the cost of carrying a text or call on
another network. There will be significant reductions in the wholesale termination rates for mobile calls and text
messages. As a result of competitive pressure, the Commission anticipates that these reductions in the wholesale rates
will flow through to the prices paid by the 4.7 million mobile subscribers in New Zealand in the coming year.
Termination rates for calls will drop to less than 4 cents by 1 April 2012, with further reductions until 2014.
Termination rates for text messages will drop to 0.06 cents from 6 May 2011.
“These changes are intended to address significant competition problems in the wholesale mobile market which have
resulted in high retail prices - particularly for prepay customers - a low number of mobile calls and high rates of
people switching networks, compared to other countries,” said Dr Ross Patterson, Telecommunications Commissioner.
“However, we continue to be concerned about the extent to which the price of calls and text messages between people on
different networks are significantly higher than calls and text messages between people on the same network. These price
differences create significant barriers for the new entry and growth of small mobile operators in the mobile market,”
said Dr Patterson.
While the Commission expects reduction in wholesale termination rates for calls and text messages to resolve this
problem, it will be monitoring this situation closely, including publishing monthly reports, and is prepared to move
quickly to limit these price differences if required.
The graduated reduction in termination rates for calls will allow mobile providers time to adjust retail rates. In
providing this graduated reduction, or glide path, the Commission has sought to balance the benefits for consumers in
terms of lower prices, while allowing mobile providers time to adjust retail prices.
You can view the final MTAS determination on the Commission’s website at:
www.comcom.govt.nz/mobile-termination-access-services-std
Background
The MTAS (mobile termination access service) relates to the portion of a call or text message to a mobile phone, once it
has been handed over to a mobile company to be transmitted to a mobile phone.
History of the MTAS investigation
On 6 November 2008, the Commission commenced an investigation under Schedule 3 of the Telecommunications Act 2001 (the
Act) into mobile termination access services (MTAS). The MTAS incorporates mobile-to-mobile voice termination (MTM),
fixed-to-mobile voice termination (FTM) and short-message service termination (SMS). The investigation is considering
whether these services should be recommended to be regulated services under Schedule 1 of the Act.
Under the Telecommunications Act 2001, the Commission can only commence a standard terms development process for
services that are specified in Schedule 1 of the Act.
On 16 June 2010, the Commission recommended in its reconsideration report that the Minister for Communications and
Information Technology allow for the regulation of mobile termination access services (including the price for those
services) by adding the services to Schedule 1 of the Act, and to reject undertakings offered by Telecom and Vodafone in
lieu of the proposed regulatory change.
On 4 August 2010 the Minister for Communications and Information Technology, Steven Joyce, announced that he had
accepted the Commission’s recommendation to amend the Telecommunications Act 2001 to allow the regulation of mobile
termination access services.
The mobile termination access services were added to Schedule 1 of the Act as a result of the Telecommunications (Mobile
Termination Access Services) Order 2010, which came into effect on 24 September 2010.
Subpart 2A of Part 2 of the Act specifies the process the Commission is required to follow in making a standard terms
determination, which sets the terms on which a designated access or specified service must be supplied with reference to
all access seekers and access providers of the service.
The process for the MTAS standard terms determination commenced on 28 September 2010, and has included submissions from
industry and a Conference held on 15 and 16 March 2011.
ENDS