2degrees is celebrating the government's decision – long flagged, but formalised this morning – to regulate mobile termination rates (MTR).The multi-sided regulatory brawl over MTR (what a phone company charges a rival to connect a customer's
2degrees is celebrating the government’s decision – long flagged, but formalised this morning – to regulate mobile termination rates (MTR).
The multi-sided regulatory brawl over MTR (what a phone company charges a rival to connect a customer’s call txt to its network) has lasted more than seven brain-melting years.
Now, provision for MTR regulation must be added to the Telecommunications Act by regulation; a change which should be enacted by the end of September (Labour has already announced its support). Then, the Commerce Commission will begin holding scoping workshops.
Hardest part just beginning
2degrees’ chief executive Eric Hertz warns that “the hardest part of the process is just beginning.”
The Commerce Commission must now determine the “true” underlying costs of MTR (the general philosophy of the regulation is that phone companies shouldn’t charge each other anything above the actual cost of connecting a call or sending a txt to another network).
Mr Hertz is already crystal clear in his own mind on the true cost of MTR “one or two pennies” a minute for a voice call” and “practically zero” for a txt.
But he concedes setting rates is an important part of the process. “We understand it has to be done carefully.”
Six months
The 2degrees boss hopes the commission can build on some of its work over the past two years but still expects it will be up to six months before regulations for cheaper wholesale mobile rates are implemented.
More to the point, he’s also hoping the watchdog will stick to its original findings, and set MTR pricing that cuts a big slice off today’s rates – and fast. (Telecom and Vodafone prefer a “gentle glide path” until 2015.)
In one report, the commission recommended that MTR be cut from 15c a minute today to 3.8c a minute, or less by 2015, and txt MTR from 10 cents per message to 0.5 cents.
They’re number two, so they try harder
Telecommunications Users Association chief executive Ernie Newman said he fears the process will take longer than six months.
Tuanz wants the big mobile carriers to pre-empt the looming law change by immediately dropping all surcharges on calls, or txts, that cross between networks.
But his morning Vodafone released a statement saying it was “disappointed” with the Communications Minister’s decision, which it says will deliver no material benefit to customers.
In other words, it’s not about to play along with Mr Newman’s plan.
The reaction did not surprise the Tuanz boss who told NBR, “If I had to take a guess I'd say Telecom would make the first move. Why? Because as the No 2 they have the most to gain.
“Vodafone is a prisoner of its own fixation about the politics of the issue.”
Telecom shares (NZX: TEL) closed down 0.5% to $2.01, in line with a broader market fall of 0.4%.
