[UPDATE: See end of story for Telecom and Vodafone comment; Comment: 2degrees again a little sneaky on MTRs]

A new telecommunications lobby group was launched in Wellington afternoon, its mission to rally in support of the Commerce Commission’s draft determination to slash mobile termination rates, and push a website that puts the heat on Telecom and Vodafone.

The full line-up of organisations behind Drop the Rate is:

* 2degrees
* Airnet Ltd
* Consumer New Zealand
* Federated Farmers of New Zealand
* Federation of Maori Authorities
* New Zealand Union of Students' Associations
* Telecommunications Users Association of New Zealand and
* Unite

In parallel, a new website has been launched, Drop the Rate, Mate. Backed by 2degrees and Tuanz, which aims to counter Telecom and Vodafone's arguments over interconnection rates. The "mate" in the title is communications minister Steven Joyce, whom the coalition is encouraging to adopt to adopt the commission's recommendation.

Today the campaign released a poll that found "On MTRs specifically, 86% and 88% of New Zealanders respectively believed that it should cost about the same to call or text someone on a different mobile network as to call or text someone on their own network." (Read the full results here.)

The new lobby group hopes the result will reassure the minister that the country is on his side.

Getting Consumer onboard will bolster the upstart telco’s credibility, adding to the weight of the company’s long-time supporter, the Telecommunications Users Association (Tuanz), which represents more than 500 corporate customers.

Roping in Federated Farmers is also a coup. The Union of Students Associations will also prove a handy platform for 2degrees’ theory that Vodafone and Telecom divide up urban markets between them, hooking students on on-net loyalty plans. The Federation of Maori Authorities likely reflects the fact that the Hautaki Trust (which brought spectrum, $5 million taxpayer cash and at least $16 million of its own money to the company) has a 16% holding in 2degrees.

Stronger together
Unite lives in an entirely different New Zealand to Federated Farmers. The union draws its members from restaurant, casino, call centre and language school workers, among other groups. For those who've seen the union's national secretary, Matt McCarten, spar with Drop the Rate spokesman Matthew Hooton (a conservative columnist and National Party confident) on TV3's Sunrise, the launch made a curious spectacle. At one point, Mr Hooton praised Unite - which regularly raises hell for Sky City Casinos and McDonalds - as "the most innovative union in New Zealand".

Airnet is an ISP and telecommunications services provider that operates in Hawkes Bay and Rotorua.

The path to MTR reform
On June 30, the Commerce Commission issued a draft determination on mobile termination rates (what telcos pay each other when calls are received by another’s network). It called for MTR on voice calls to immediately halve to 7.2 cents per minute on voice calls, with further cuts taking it to 3.8 cents by 2015 - what it the watchdog sees as the true wholesale cost of interconnection.

For txt, it called for an immediate drop from 10 cents a message to 0.95 cents, with further cuts down to 0.5 cents by 2015.

2degrees would like to see MTR charges scrapped altogether.

The commission recently recommended that MTR be reduced to 7.2 cents per minute immediately for voice calls, with a series of further cuts through to 2015. A review and consultation process is now underway, with communications minister Steven Joyce likely to make a decision on the matter in the New Year.

Many independent observers, including Tuanz, representing 500 corporate customers, have strongly backed the commission’s call for voice MTR of 7.2 cents or below.

Tuanz boss Ernie Newman says inflated MTR adds between $250 and $300 to the average customer’s cellphone bill. Like 2degrees, he would like to see interconnection charges wiped.

Hertz so good, but could do better
Speaking at the Drop the Rate launch, 2degrees' new chief executive Eric Hertz said his company could be a success in the current market, but that addressing MTR would see customers get more txt, and more voice minutes, for the same money.

Fear of Telecom, Vodafone reprisals
Drop the Rate spokesman Matthew Hooton said at the launch that "Telecom and Vodafone are ripping us off." Mr Hooton said the telcos' duopoly also distorted the landline market by inflating the cost of calls from landlines to mobiles, and hurt New Zealand's business productivity.

Mr Hooton said that the Drop the Rate website included an online petition, which people could sign anonymously if they "fear reprisals from Telecom or Vodafone". Around 100 people signed the petition this morning.

Fear of a backlash had made organisations that are current Telecom and Vodafone customers wary of joining the Drop the Rate campaign, said Mr Hooton.

Telecom, Vodafone manoeuvres
Telecom and Vodafone have countered that the commission can only regulate wholesale rates, not retail pricing, and that a similar determination in Australia saw Telstra simply pocket most of the difference; in fact, mobile pricing rose slightly, according to an ACCC study tracking the impact of the regulation. The pair say while a voluntary legal deed they signed in 2007 calls for gentler reductions, all are guaranteed to flow through to retail pricing.

For its part, Telecom has challenged all carriers to agree to a voice MTR of 7 cents a minute - though by 2015, rather than immediately as the commission is angling. Mr Newman has said that such a delay would add $1300 to the average mobile user's bill over the period.

Telecom and Vodafone have headed off commission investigations into MTR twice before by reaching voluntary commercial deals, and the watchdog has said it will revisit its inquiry if they can get their act together again.

The new publicity campaign by 2degrees, and its newfound allies, will help them sharpen their offers - and perhaps make the minister less likely to compromise.

UPDATE:

Vodafone has just released the following statement:

Vodafone welcomes 2degrees latest marketing initiative but would like to point out a few inaccuracies.

Lower termination rates do not result in lower retail prices as suggested. In fact, the Commerce Commission itself has pointed out that reducing termination rates will increase mobile prices by as much as $180 million over five years. The customers most affected will be those on prepay who don’t make many calls.  (pg 17).

New Zealanders enjoy some of the best mobile pricing in the OECD – New Zealand is firmly in the top half of the OECD and just this week Vodafone has reduced the price of the country’s cheapest On Account plan from $18.95 to $16.95 per month.

Vodafone knows customers want value and we have worked to reduce voice costs by 55% and TXT prices by 75% over the past four years.

Vodafone customers benefit from great value products likes Family and BestMate. Half a million customers have a Best Mate and on average they make $375 worth of calls and TXTs for only $6 a month. This adds a whopping $950 million of additional value for New Zealanders each year.

The statement will no doubt further file 2degrees and Tuanz, both of whom have criticised Best Mates and other loyalty plans for rewarding on-net calls (call to others on the same network).

For Telecom, spokesman Mark Watts says, "We have been dropping the rate, mate." Mr Watts points to Telecom's recent offer to drop voice MTR to 7 cents a minute by 2015, and cuts that Telecom and Vodafone have already made voluntarily since MTR was over 20 cents.

Mr Watts also said that Telecom's XT network had unique offers such as per-second billing for pre-pay customers. Shared minutes for families and small businesses was another point of difference beyond raw rates per minute.