Mobile termination - TUANZ lodges submission with Minister

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Posted Tue 9 March 2010 @ 2:33 p.m. by Ernie Newman

TUANZ yesterday lodged our Submission on the Commerce Commission's split recommendation in the long-running investigation into mobile termination access services.

We urged the Minister to reject the recommendation of Telecommunications Commissioner Dr Ross Patterson and Associate Commissioner Pickering, and instead adopt the dissenting view recorded by Commissioner Anita Mazzoleni that mobile termination become a regulated service.

Our full Submission is here.

Categories: Regulatory | TUANZ policy | Wireless carriers

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8 comments

• Paul Brislen says:

  Ernie, I refer you back to a comment you made late last year (November 9) on this very blog (http://www.tuanz.org.nz/blog/e379f711-b2b6-4423-9e32-4a8bf9f301db/6aca5b34-7d2f-4652-bdf9-78255e855f05.html).
  You were talking about the request from the Commission for a joint Undertaking from the industry and you said, “This seems to me a good piece of pragmatism. I hope they'll accept the opportunity and work toward a good faith solution. Commercial deals, even at the point of a regulator's gun, are usually the best outcome. And as the Commission has observed a commercial solution will ensure earlier achievement of benefits for end users.”
  That’s entirely why the Minister should accept these Undertakings. The “commercial deals, even at the point of a regulator’s gun” you speak of ARE the best outcome. Customers will benefit in October rather than waiting for 18 months or more for a revised recommendation and then (possibly) regulation from that point.
  This is a huge win for TUANZ and its members. You’ve convinced the Commission to push us into dropping rates by 45% for voice calls and dropping the charge for TXT messages entirely. It may not be called “regulation” but a legally-binding undertaking is just another form of regulation. It will carve $80m a year off Vodafone’s revenue for each of the next five years – that’s no small change. The Commissioner sees that an offer on the table that kicks in from October trumps a possible saving delivered in 18 months’ time. I’m hoping the Minister and your constituents will see that also. Cheers, Paul
  

  Added: 10 March 2010, 9:57 a.m. Flag as Spam  |  Flag as Offensive

• Michael F says:

  Yes Paul, but the "commercial deals" need to address the problem not simply paint over the cracks. I (and most the corporate sector clients who I work with) have heard the "customers will benefit" line from the traditional carrier community time and time again and the sad fact is that what it ends up meaning is "in the short term it'll look like a benefit, but in the medium-long term we'll be well behind where we should be".
  
  All the initiatives that are currently in train in the telecommunications industry are about redressing the systemic issues that have, in aggregate, constrained NZ's economic performance. I do understand shareholder wealth/return imperatives but I also understand the counter-balance with the national interest. Some might suggest that the $80m (or whatever number it really is) simply represents 'super-profits' which you've enjoyed for long enough...
  
  I'm hoping you guys in carrier land will work with everyone as we move into a new environment in which I'm certain there'll be ample profit for all (and no, I'm not socialist by nature..., rather realist).

  Added: 10 March 2010, 3:31 p.m. Flag as Spam  |  Flag as Offensive

• Roam Free says:

  Amazing how much effort can be put into defending the indefensible…. Undertakings engineered by a cosy duopoly to just fit under the regulator’s radar are still a rort. Or, in otherwords: do as little as we can get away with, and bully whomever we can into agreeing with us. Number portability has really shown what a nonsense MTRs as they exist really are, even more so than the stupidity of the unique dual handset phenomenon; wherever I travel internationally there is no concern about cross network calling, usage is way higher in the mobility, and this argument does not even get mentioned (unlike roaming, but let’s not start on that other, even worse evil here, yet…). We need to regulate against greed because we you guys still just don’t get it.

  Added: 10 March 2010, 4:18 p.m. Flag as Spam  |  Flag as Offensive

• Telecommando says:

  Hi,
  As a user it strikes me as bizarre that we have a process that requires the application f diamond grade pressure to create a so called 'commercial deal!'
  I'm just glad that termination rates are not part of the internet landscape or we'd all operate in little isolated clusters based around which ISP we use!
  I think the operators would find that any impact on current business models will be compensated by a lot more usage!
  We're heading for a converged world very rapidly and we need a consistent set of rules across all our communication services.
  Number portability is starting to make it nearly impossible to even know when a call is either on or off net!
  This feels like the com com heading backwards!
  

  Added: 10 March 2010, 5:37 p.m. Flag as Spam  |  Flag as Offensive

• Paul Brislen says:

  Hi Michael, so what problem is being ignored with our Undertakings? Serious question - because the Commissioner seems to think (quite rightly) that we've addressed all of his concerns in our offers. The price of TXT termination drops to zero, the price of call termination drops to 6c/Min. Surely that's a win for customers? The win for Vodafone is that the impact on our business isn't minimised (far from it - $80m a year every year for the next five years is a lot of money) but it is managed, and we can cope with a glide path. Surely you're also after an industry that can continue to invest in new network deployment and growth? LTE is just around the corner and that's going to be a multi-billion dollar effort from all concerned.

  Added: 10 March 2010, 6:13 p.m. Flag as Spam  |  Flag as Offensive

• Mal says:

  Ernie, I applaud your stand on MTR rates.
  
  Most submissions from 2nd tier Telcos was to ‘take the money and run’. They see they will receive earlier benefits than waiting for a regulated decision and the attendant risks to that. Indeed a discounted cash flow calculation shows that both they and their customers will benefit from the voluntary proposal. The reality is that if you are seeking long term benefits for end users as the Act states, then it should be regulated to ensure the long term price is closer to cost, even if this does delay the price relief.
  
  Personally I do not think this is as bad for the mobile carriers as they think- financially they will gain from the added delay.
  Either way, it is a shame that Mobile calls to 0800 numbers are not covered (as I understand it) as for the life of me I can’t see any difference in cost to justify those calls not being included. Looks like non-mobile carriers will be stuck paying up to 24cents/minute for those calls from Telecom mobile. (Vodafone reduced their rate in line with the last Govt undertaking). This is not good for end users. Many of them have to block mobile calls to their 0800 numbers because of this bizarre situation. I wonder if the major Telcos have factored this lost revenue into their models- come on guys, add this to your voluntary undertaking.
  

  Added: 10 March 2010, 7:33 p.m. Flag as Spam  |  Flag as Offensive

• Michael F says:

  Yes I've read Ross's rationale. But I've also read Anita's and in this instance (with respect) I think Anita has it right and Ross has it wrong. And contrary to what some industry lobbyists would have us believe, I think precedent has demonstrably proven that a more openly competitive market environment (read level playing field) yields increased investment. I might be wrong, but I'd wager if MTRs were regulated (or better still the industry agreed to bill and keep going forward) we'll still see Voda playing vigorously in the LTE world (I hope so... I'm a customer!)

  Added: 11 March 2010, 12:43 p.m. Flag as Spam  |  Flag as Offensive

• Alan says:

  Paul I note that Mexico and New Zealand are the only two countries in the OECD that do not regulate mobile termination rates. Due to regulation by the EU, MTRs throughout Europe will be capped at 6 cents per minute by 2012, I note that the voluntary undertakings by Vfone and Telecom are not capped at this figure until 2014. Please correct me if wrong.

  Added: 24 March 2010, 5:17 p.m. Flag as Spam  |  Flag as Offensive

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