Mobile termination rates coming down
December 23rd, 2010 at 3:00 pm by David FarrarRNZ report:
The Commerce Commission says the cost of switching phone calls and texts between mobile networks should drop sharply from April next year.
In a draft decision, the regulator says the cost of mobile termination rates should be cut from about 17 cents a minute to 4.7 cents a minute.
The price would gradually drop to 3.9 cents by April 2014.
For texts, the commission is recommending what is known as a “bill and keep model”, under which phone companies do not charge each other for routing messages, partly because the cost is already low.
This means that telcos can now afford to do text packages that won’t be restricted to recipients on their networks only.
Just under 5c a minute for phone termination is not too bad either.
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- Mobile termination rates to be regulated
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December 23rd, 2010 at 3:09 pm
Taxes are also pretty high. Can we regulate that down too?
Vote:December 23rd, 2010 at 3:12 pm
A great decision (although I think the 4.6 cents per minute should be lower. 2degrees will be pleased – they have been fighting for this for years – and their business model is based on an open and free market. Something Vodafone and Telecom have done their best to deny the customers. My View is that this should now proceed as quick as possible – does anyone know the date by which al this must be implemented?
As a dedicated 2degrees customer I now hope the cost of calling Vodafone and Telecom is significantly reduced. I look forward to text bundling of say 2000 texts for $10 to any network – or a flat rate of 2 cents per text. That would be good for 2degrees as they try to grow their market.
Vote:December 23rd, 2010 at 5:06 pm
Great to see Bill and Keep starting to be introduced. That will create a very competitive market for text.
Vote:December 23rd, 2010 at 6:42 pm
As far as I can tell they didn’t even assert that the Commerce Act is being breached, let alone produce evidence of any breach. The Commerce Commission, with help from Steven Joyce and National, appears to be just saying they don’t like what the companies are charging so will force them to charge a different rate. Muldoon would have heartily approved.
Vote:December 23rd, 2010 at 6:59 pm
Exactly Nigel. I suspect this move is supported by those who favour any regulation that benefits them personally. Never mind the principle, or any absence of consistency.
Vote:December 23rd, 2010 at 7:11 pm
It’s the Telecommunications Act that allows this regulation you idiots. Why should Vodafone be allowed to charge hugely above cost for other companies to send txts or calls to its customers?
Vodafone NZ has paid out over $1 billion in special dividends to its parent company. Why do you think that is?
Vote:December 23rd, 2010 at 7:13 pm
These rates are regulated in nearly every other country around the world and that’s really caused them damage hasn’t it!!!
Vote:December 23rd, 2010 at 7:27 pm
Anthony, dividends are the result of a company doing what the customer wants at a price the customer is prepared to pay. If you support regulation of successful companies’ cost structures, then where else should the same principle be applied? AirNZ? Oil companies? Forget the telecommunications act, think about the principle. Where else should the government intervene… for consistency’s sake?
Vote:December 23rd, 2010 at 7:35 pm
Natural monopolies are regulated the world over. Vodafone have a monopoly on terminating calls from other networks to Vodafone customers – so once they have reached a certain size they can stop over companies fairly competing in the market. It is a completely different situation to oil companies, Air NZ, etc. Furthermore all that is being regulated is wholesale prices for interconnection. Like David has pointed out before, imagine if you had to pay termination fees for email!
Vote:December 23rd, 2010 at 8:00 pm
If there were termination fees for email, there would be email providers who didn’t charge termination fees and you wouldn’t receive too many emails unless you signed up to to one of those providers.
Ther reason that phone systems are different is that providers have a lot more infrastructure they need to pay for and customers are willing to pay the fees currently being charged rather than insist their friends switch away from Telecom and Vodafone.
This is no more a ‘natural monopoly’ than being the only takeaway place in a small town. Others can compete, but it’s not worth bothering because the market is too small. Enforced price controls will make that worse not better.
Vote:December 23rd, 2010 at 8:04 pm
Anthony, I was a BellSouth customer and have stayed with the business over that last 18 years. The government offered no regulated interconnect terms then, nor when BellSouth became Vodafone and had less than 15% of the mobile market. Vodafone’s growth was the result was, like I said, doing the customer wants at a price the customer was prepared to pay. If 2Degrees needs government intervention on interconnect to succeed (having already received the benefit of mandated roaming.. which increased their effective ROIC) then I call them weak.. and hope they won’t be here long.
Vote:December 23rd, 2010 at 10:56 pm
Dare I say it, but the phrase “mobile termination” conjures up images of a backstreet abortion van going around the country. At least the rates are coming down!
Vote:December 24th, 2010 at 3:28 pm
krazykiwi, I wonder what would have happened had Telecom refused to let its customers call those first BellSouth customers – you would have no doubt been screaming for regulation. Anyway, the situation is different now as nearly everyone has a cell phone so the only way a new entrant can make progress is if they can interconnect on reasonable terms. This is such a simple principle – I wonder if you guys would pass Econ 101 – I have my doubts!
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