TUANZ vlogs termination rates

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Posted Mon 20 July 2009 @ 4:21 p.m. by Louis van Wyk

TUANZ has produced its first ever video blog. Or as those in the know call it – a vlog.

Some of you may already have seen it, as we launched the video in our TUANZ This Week email newsletter on Friday. If not, you can view the video by click the image below.

The video, produced by Auckland-based Digital Productions, is part of our ongoing campaign to tackle mobile termination rates.

The aim behind the video is to highlight why this is such an important issue for New Zealanders.

You would have heard us speaking out about this a lot recently, but please take a few minutes to watch this short clip as it addresses a serious matter that demands the attention of all telecommunications users.

We plan to bring you more such video blogs in the future on issues affecting users. To see them first however, register for our weekly newsletter – just send us your name, company name, job title and email – click here.

Categories: Regulatory | TUANZ policy | Vendors | Wireless carriers

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1 comment

• Brian says:

  Interesting video Ernie, but unfortunately you are continuing to perpetuate the myth that mobile termination rates influence retail call pricing. Well, to be fair, you are right when it comes to new entrants like 2 degrees, but for Telecom and Vodafone it is a complete nonsense. The two heavyweights would like you to believe this myth, and they continually misrepresent [maybe they don't actually understand - - ] the issue in the news media.
  
  The fact is that the long run marginal cost of terminating a mobile call is now probably in the region of 1 cent per minute. And, while they have roughly equal marketshare it really doesn't matter what the termination charge is, because each will be charging the other the same [in gross terms], and this nets out in terms of company profit. That is, there will be a revenue for calls terminated and a roughly equal cost for calls delivered to the other network.
  
  There are three reasons why Telecom and Vodafone don't want to lower termination rates:
  1. The revenue line in their accounts will diminish - - and financial analysts are focussed on revenue
  2. Higher rates do make it more difficult for a new entrant to compete, because the flow of calls is significantly imbalanced, so the cost to the new
  entrant is real
  3. Lower termination rates expose retail margins, and destroy the myth that the big boys have been continuing to foist on the confused public and
  commentators for years.
  
  So, it doesn't really matter to Telecom and Vodafone whether the termination rates were 15 cents, or $15, or perhaps 0 cents - - as it is in some countries. The profitability of the company remains the same, and it has no influence on the retail call prices nor the retail call margins.
  
  It is time the smoke and mirrors were blown away and the real cost structures [and monstrous margins] in this business were exposed.
  
  Feel free to get in touch Ernie and I will explain further - - and perhaps tell you how I know - - .

  Added: 12 August 2009, 8:42 p.m.