Four months after the Commerce Commission regulated Vodafone, Telecom and 2degrees' wholesale network pricing, the watch dog sees ecouraging signs. UPDATED with Telecommunications Users Association comment.
In May, after a multi-year fight, the Commerce Commission finalised plans to regulate mobile termination rates or MTR or what one phone company charges another when a call or txt from a rival connects to its network.
UPDATE: Vodafone, 2degrees unhappy after Commerce Commission report
Two questions remained.
1) Would MTR cuts flow through to retail pricing? (The commission can only regulate wholesale pricing.)
2) Would MTR cuts lead to a decline in on-net pricing? (Steep discounts for calling people on the same network, allegedly used in concert with high MTR to make life difficult for newcomers. 2degrees wanted to see on-net pricing regulated as well).
To nullify these concerns, the commission promised a series of monthly reviews of Telecom, Vodafone and 2degrees’ pricing and plans.
Telecommunications Commissioner Ross Patterson warned there was a strong likelihood of further regulation if the watchdog didn’t see the price differential between on-net and off-net calls and txts narrow.
The first report was released this morning.
ABOVE: Regulated wholesale price cuts appear to have accelerated the downward trend in the cost of making an off-net mobile call (a call to someone on a rival network). Click to enlarge.
On-net bad, off-net good
Four months after after regulating MTR, the Commerce Commission’s first mobile monitoring report shows there has been a small increase in "off-net" action, or calls and text messages between mobile networks.
Traffic across mobile networks has increased in the three month period from May – July 2011 and that the difference between the average costs of calls within networks and between networks has narrowed - a sign that phone companies are not penalising their customers as much for calling people on a rival network.
Long way to go
“While these early trends are promising, and are definitely heading in the right direction, there is still a long way to go,” Telecommunications Commissioner Ross Patterson said.
“It’s what happens in the next few months that will be critical. We would expect to see an acceleration of these trends over the coming months.”
Between May and July 2011, cross network traffic increased by 1.2 per cent for mobile calls and by 2.9 per cent for text messages. At the same time, the price difference between on-net and off-net services decreased by 4.4 per cent for mobile calls and by 3.4 per cent for text messages.
Next few months critical
The Telecommunications Users Association (Tuanz) also sees encouraging signs.
"It's a good first step given how long it takes a mobile phone company to produce new plans,," Tuanz chief executive Paul Brislen told NBR.
"If the telcos continue on this trend- although I would hope somewhat faster - then all will be well," Mr Brislen said.
"If not, it's back to the Commission and the threat of retail price controls, something I'm sure the telcos don't want to see. The next few months will be critical."
ABOVE: As on-net plans (with steep discounts for calling others on the same network) have come under increasing regulatory pressure, more and more have been messaging people on other networks.
Under the thumb
As part of the Commission’s determination on mobile termination access services (MTAS), the Commission is collecting mobile data on a monthly basis which it will report on quarterly. The next report for the August – October 2011 period is due out in December 2011.
2degrees, Telecom and Vodafone will be required to report to the commission within 20 working days of the end of each month on:
The whiolesale cuts
Termination rates for txt messages were regulated down from 10 cents per text a 0.06 cents as of 6 May 2011 (the nominal charge is to deter spam).
The Commerce Commission, prodded by Communications Minister Steven Joyce, also mandated the following cuts to mobile voice calling MTR.
RAW DATA: The full report is on the Commerce Commission's website here.
