Soon-to-launch third mobile operator 2degrees has struck a deal with Vodafone that will give it sweet-heart pricing on calls that cross between the two companies’ networks. Vodafone wants the terms of the deal made public. And, contrary to a report this morning, the Commerce Commission is happy for the rates to come out, too.

Mobile termination rates (MTR) are what telephone companies pay each other - or, in 2degrees’ ideal universe, don’t - when calls cross between their networks.

The commission recently released a draft ruling saying that termination rates are set artificially high, reaching similar conclusions to the Telecommunications Users Association, which says inflated MTR adds $250 to $300 per year to the average cellphone user’s bill, and constitute a barrier to new entrants coming into New Zealand’s mobile market.

2degrees has made MTR its signature issue, saying it can’t offer market-busting pricing unless termination rates are regulated down.

Currently, MTR for cellphones is set at around 15 cents per minute for voice calls, and 9 cents per minute for text, with the network that receives the call paying the charge (a set-up that benefits Vodafone as the largest mobile operator. Conversely, it would weigh most heavily on 2degrees, especially during its start up phase as most calls would be incoming).

The commission’s draft ruling - which communications minister Steven Joyce will consider in the New Year after more submissions from all sides - was that MTR rates should be halved.

For some months, Vodafone has said it already has a commercial deal with 2degrees on MTR (and separate deals on domestic roaming and collocation).

Vodafone: show and tell
This morning, it was reported that neither the Commerce Commission, Vodafone or 2degrees wanted the side-deal made public.

But this afternoon, Vodafone external communications manager Paul Brislen said his company definitely wants the deal made public. However, it can’t do so unless 2degrees also agrees.

And Commerce Commission telecommunications branch director Osmond Borthwick told NBR it was his clear understanding that Vodafone now wants the deal made public, and the commission itself has no issue with the terms being revealed. However, 2degrees wants it to remain confidential - which ties the director's hands.

And 2degrees is not about to release Mr Borthwick from his obligation to stay silent on the issue.

“It’s a confidential agreement, and we take the terms of our confidential agreements seriously,” said 2degrees head of corporate communications Bryony Hilless.

While Mr Brislen would not reveal any terms of the MTR deal between Vodafone and 2degrees, Vodafone’s desire to have it made public speaks to it being lower than the 14.5 cents voice/9 cents per text rates that pervade at present.

Telecom: no side-deal with 2degrees
The commission says all telcos have the opportunity to make commercial progress on MTR before the next phase of its review, due in September - and offering 2degrees a better termination deal is definitely one way to try and head-off formal regulation.

However, so far only Vodafone has come to the party.

Telecom media relations executive Ian Bonnar said that “No standalone deal with 2degrees on MTRs is in the offing.”

Vodafone and Telecom are using a number of arguments against regulating MTRs, including the fact that the Commerce Commission can only regulate wholesale termination rates. In Australia, regulated wholesale MTR failed to flow through into retail pricing.

While a set of voluntary deeds that Telecom and Vodafone signed to head off the last attempt at MTR regulation call for a more gentle reduction in termination rates, all savings are guaranteed to be passed on to the public, say the pair.

Vodafone has also been goading 2degrees to release the terms of the pair's domestic roaming agreement (when outside Auckland, Wellington and Christchurch, 2degrees customers will roam - invisibly to them - on Vodafone's network). Again, the implication is that 2degrees is getting a better deal than its frequent complaints would suggest.