ComCom split 2:1 on mobile termination rate

The Commerce Commission has this morning recommended accepting Vodafone and Telecom's phasing in lower mobile termination rates, backing away from market intervention.As predicted by NBR, Telecommunications Commissioner Ross Patterson said in a statement this morning he was satisfied both regulation and accepting Telecom and Vodafone's final proposals would address competition concerns.

The Commerce Commission has this morning recommended accepting Vodafone and Telecom’s phasing in lower mobile termination rates, backing away from market intervention.

As predicted by NBR, Telecommunications Commissioner Ross Patterson said in a statement this morning he was satisfied both regulation and accepting Telecom and Vodafone’s final proposals would address competition concerns.

“In my view, the long-term interest of consumers will best be served by applying the least intrusive means to address the competition concerns identified in the investigation. This will allow market forces to continue to operate in areas outside the scope of intervention.”

Mr Patterson recommended Communications and Information Technology Minister Steven Joyce accept proposals from the two companies on mobile termination access services, after a split (2:1) decision.

Both Telecom and Vodafone offered to cut calling and text mobile termination rates to very close to what the commission wanted, although the proposed timetables were more relaxed – phasing in cuts, rather than slashing rates straight away.

“The final undertakings from Vodafone and Telecom have offered mobile termination rates that are significantly lower than those offered in earlier undertakings. While these rates remain above the range of the commission’s cost-based benchmarks, they address the competition concerns identified by the commission, and my recommendation is that they be accepted by the Minister.”

He said increased competition for customers should lead to better prices and services.

Commissioner Anita Mazzoleni said mobile termination rates would be reduced three months earlier than a regulated outcome, however they would remain significantly higher than the commission’s benchmarks.

“In my view, the barrier arising from the prices in the final undertakings continues to ensure an uneven playing field, and this will impede the benefits competition will otherwise deliver to New Zealand consumers.”

Submissions are now open on new matters raised in the report and to update existing submissions made before the report.

Mr Joyce, who is promising a “timely” decision, may accept, reject or require the commission to reconsider under the Telecommunications Act.

“While I do not intend to re-open issues that parties have already had the opportunity to raise with the regulator, I am inviting comments on any matters raised in the report that were not, and could not have been, raised in previous submissions to the Commission, and on any relevant information that is not addressed in the Commission’s report,” he said.

The Commerce Commission did not recommend regulating MTR on the 2degrees network, given 2degrees had withdrawn all previous undertakings.

The final undertakings
Under the final Telecom and Vodafone undertakings, per-minute voice-call MTR will drop from above 15 cents today to to 10 cents in 2011, 9 cents in 2012, 8 cents in 2013 and 6 cents in 2014.

A so-called bill-and-keep approach would see MTR effectively wiped for txt, as long as messages between networks remain roughly comparable in volume.

In short, Telecom and Vodafone have a little high with their rates and tardy with their timetable on voice MTR, compared to the Commerce Commission's original proposal, but more generous with txt.

The commission originally asked for the immediate halving of MTR on voice calls from 14 cents to 7.5 cents with a glide path to 3.8 cents by 2015. 

For txt, it called for a immediate cut from 10 cents to 3.8 cents. Further cuts to 0.5 cents by 2015.

2degrees, which opposes MTR full-stop, did not submit final undertakings.