Mobile rates to come down

February 22nd, 2010 at 11:33 am by David Farrar

The Commerce Commission has decided (by a rare 2:1 split) not to recommend regulation of , as the undertakings by telcos is deemed satisfactory.

The Government is consulting on the recommendation. Regardless of whether it goes with commercial undertakings or regulation, it means prices should drop. The mobile termination rate is the rate charged to receive and terminate a call to a mobile phone, so it acts as a floor on charges.

The mobile termination rate is 17.53c a minute for Telecom and 17.90c for Vodafone. Under the final undertakings these will drop to 10c in 2011, 9c in 2012, 8c in 2013 and 6c in 2014.

That is good for consumers, but not so good for competition as it means it is not until 2014 we get them to 6c. If they recommended regulation then one might get to that level in 2011.

As for text message termination rates, the final undertakings are to move to bill and keep (ie no termination rate) so long as traffic is balanced within 7%.

Reading the executive summary, I was interested to find out that 80% of all voice calls and 90% of all SMS traffic is on the same network. This is much higher than in other OECD countries, and is a result of the high MTRs we have had.

Tags: , ,

12 Responses to “Mobile rates to come down”

  1. berend (1,599 comments) says:

    I’m going to vote for the party that drops the terminate rate to zero cent. Screw the telcos! It’s a human right to have 0 dollar phone calls to anyone I please.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  2. petal (698 comments) says:

    Oh look, berend has stuck pencils in his ears!

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  3. Pete George (21,796 comments) says:

    Berend, this is not about zero cost phone calls. It’s just the termination rate, which is only one component of pricing. And there is a good indication it is a grossly inflated component, a cosy profit gouging market protection arrangement, if they can agree to cutting it to about a third of it’s current level withing four years. The termination rate is an impediment to reasonable competition.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  4. JC (838 comments) says:

    Are there any implications for Vodafone Mobile and Xtra’s broadband data sticks?

    JC

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  5. berend (1,599 comments) says:

    Yes Pete, I’m so happy to have a government that will decide what reasonable competition is.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  6. spector (180 comments) says:

    Once 2degrees has there own cellphone network covering the country you’ll find that vodafone and telecom will all of a sudden have a change of heart about termination rates. Who knows, by 2012 we may have another player in the market doing cellphones economically by satellite rather then cell towers. Either way market forces will do in a week what governments can’t do in four years.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  7. Monty (944 comments) says:

    Termination rates exist only to keep competitors out of the market. 2degrees is doing a great job penetrating with over 200,000 customers – but they must be finding it very difficult neverthless because of the termination rates. Already they are by far the cheapest when it comes to pre-paid mobile being up to 75% cheaper than Telecom and Vodafone. Removing the anti-competitive termination charges will make the playing field very even and brings in true competition.

    With numbers being easily transferred between networks (ie keep your number no matter who you are with) I would think anyone would be a fool to stay with Telecom of Vodafone – especially if they are on the pre-paid network.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  8. spector (180 comments) says:

    That’s true monty, I changed over to 2 degrees last year and so far my phone bill is 37% of what it was with vodafone. But government intervention didn’t make that happen.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  9. Monty (944 comments) says:

    One question if they can drop the termination rates to say 6 cents by 2014, then what is the logic is taking so long ? Why not drop the rates now – except to protect their monopoly as long as possible. Joyce needs to grow some balls on this and either Telecom and Vodafone drop termination rates voluntarily now or the Government will regulate.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  10. MikeNZ (3,234 comments) says:

    Removing the anti-competitive termination charges will make the playing field very even and brings in true competition.
    Monty
    lets just remove it now, if National is really serious about economic growth and stimulating the economy.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  11. spector (180 comments) says:

    “if National is really serious about economic growth and stimulating the economy.”

    well so far National have been at best a status quo government that has kept all it’s pre-election promises. Unfortunately those promises were basically “here’s a list of things we won’t change”. The worst thing about National is they are not doing anything. The best thing about National is they are not spending huge amounts of money trying do do something.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  12. Monty (944 comments) says:

    MikeNZ – I wish that the Government would regulate to get rid of all termination charges now – and there is no reason why they cannot. They are protectionist and the consumers are being ripped off. Hell getting rid of termination charges would more than compensate so many people for the GST rise that is imminent.

    In reality regulation to get rid of termination charges is the only way to open up the market. At present Vodafone and Telecom charge 9 cents per text for termination. This is outrageous. Why should it be anything (or at a maximum 1 cent) when all that is being sent is a tiny bit of data (max 160 characters).

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote

Leave a Reply

You must be logged in to post a comment.