The Commerce Commission has confirmed 2degrees' suspicion that the final leg of mobile termination rate regulation – and with it the promise of cheaper cellphone calls – will drag into next year.
The Commerce Commission has confirmed 2degrees’ suspicion that the final leg of mobile termination rate regulation – and with it the promise of cheaper cellphone calls – will drag into next year.
The commission today outlined a “scoping workshop” and consultation process that will wrap up with a “standard terms determination”(STD) – or recommendation of what 2degrees, Telecom and Vodafone should charge each other, wholesale, when calls and txts cross between their networks – by March 2011.
One saving grace: the Telecommunications Act has already been amended (with multi-party support, on September 24) to accommodate mobile wholesale price regulation.
Another: the STD will not have to be run by Communications Minister Steven Joyce, whose approval has been required for other parts of the MTR regulation process.
"We will move very quickly from the release of the final STD to setting the regime in place," a spokeperson for the commission said.
2degrees philosophical
Speaking earlier to NBR, 2degrees chief executive Eric Hertz was philosophical about the drawn-out process – which he correctly estimated would take six months or more.
Although the minister had, following a multi-year process, finally come to the conclusion that MTR regulation was necessary, Mr Hertz said the most crucial part of the process – determining the true cost of calls and txts between network, and hence the at-cost regulated MTR rate – was only just beginning.
2degrees recognised that “the hardest part of the process is just beginning.” and the commission had to take time to get it right, Mr Hertz said.
True underlying cost
The watchdog 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.”
What savings could you see?
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, Mr Hertz is 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 10c a message to 0.5c.
And once, finally, MTR regulation becomes law some time in 2011, a new question will emerge: will phone companies pass on the cuts?
The commission can only regulate wholesale rates, not retail.
The drawn-out MTR timetable (the initial investigation began in the early days of the previous Labour government) is perhaps illustrative for anyone hoping the current investigation into transtasman roaming rates will be quickly wrapped.
NBR will be happy to be proved wrong.
