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ComCom asks minister to consider Vodafone's $12 deal

A new $12 Vodafone deal has caused the Commerce Commission to have second thoughts about a recommendation not to regulate wholesale mobile pricing.In February, the watchdog recommended to Communications Minister Steven Joyce that he accept voluntary under

Chris Keall
Tue, 20 Apr 2010

A new $12 Vodafone deal has caused the Commerce Commission to have second thoughts about a recommendation not to regulate wholesale mobile pricing.

In February, the watchdog recommended to Communications Minister Steven Joyce that he accept voluntary undertakings from Telecom and Vodafone as an alternative to regulation or MTR (mobile termination rates, or what one telephone company pays another when a call or txt connects to the other's network).

Earlier this month, Vodafone launched a killer deal, offering 200 minutes of calls to any landline (including competitors), or another Vodafone mobile customer (that is, on-net), for $12 a month. It advertised the new Talk add-on on its website as providing 6c a minute calling.

The minister has requested the commission’s view on whether Vodafone’s new on-net plan is material to concerns identified in the commission’s final report relating to the issue of whether smaller operators could compete with Telecom’s and Vodafone’s on-net retail rates.

NBR's take was that the $12 calling plan was in part a competitive reaction to 2degrees.

The newcomer has previously complained that such "on-net" deals (discounts for calling customers on the same network) can be used in combination with high MTR to smother competition (although 2degrees early success in attracting 206,000 customers, and the launch of its own on-net plan has somewhat undermined its argument).

Today, at the Tuanz Telecommunications Day conference in Wellington, 2degrees chief commercial officer Bill McCabe called the decision "encouraging."

Vodafone: $12 plan is not "on-net"
The commission had hoped the pricing gap would narrow, said Mr McCabe, but Vodafone's new deal show's its widening.

A Vodafone spokesman said the $12 Talk plan was not an on-net deal, because landline calls could be made to anyone on any network.

Beyond that, Vodafone only offered, "The Commerce Commission has raised some points and we hope to discuss it with them as soon as possible."

Telecom: take the Vodafone complaint outside
A Telecom spokesman said his company would like the commission to investigate Vodafone's $12 deal separately, so as not to hold up the MTR decision.

Regardless, the commission is saying the $12 plan could constitute a reason to rethink its recommendation.

“Since becoming aware of the launch of Vodafone’s new Talk Add-on product last week, the commission has reviewed the details of, and the type of market behaviour exhibited by, Vodafone’s new Talk Add-on product. The Commission’s initial view is that such a plan, and any market outcomes which may arise from it, may be material,” said Telecommunications Commissioner Ross Patterson.

“Further, the commission’s initial view is that such a plan may have the potential to affect the basis for the commission’s recommendation in the final report. 

“The commission has invited the minister to take account of the Talk Add-on product in his assessment of whether Telecom’s and Vodafone’s final undertakings should be accepted, or whether it is appropriate to request the commission to reconsider its recommendation in light of the potential impact of Vodafone’s new Talk Add-on product,” Dr Patterson said.

Chris Keall
Tue, 20 Apr 2010
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ComCom asks minister to consider Vodafone's $12 deal
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