Drop the Rate, Mate

Curia did some polling for the Drop the Rate, Mate campaign, and the full results of the polling are on curiablog.

The eight organisations behind the campaign are not ones you would normally see agree on much. You have Federated Farmers and the Unite Union. You have the Consumers Institute and the Federation of Maori Authorities. You have NZUSA and TUANZ, plus the new mobile carrier 2degrees and Airnet.

They are calling on the Government to accept the recommendation of the Commerce Commission and reduce the termination rates telcos charge each other as these rates keep competition out, and keep costs higher.  You can sign the online petition on the campaign website.

The Commerce Commission previously recommended the rates be lowered speedily by regulation, but Trevor Mallard on behalf of the then Labour Government rejected doing this, in favour of a deal with the two big telcos for smaller slower voluntary reductions (with a guarantee the reduction in the wholesale fee would be reflected in their retail fees). The Commerce Commission has concluded these did not go far enough and has recommended more dramatic drops. It is thought the current termination rate for a text message is around ten times greater than the actual cost of receiving a text message and passing it onto a phone.

I’m not surprised to see NZUSA supporting the campaign, as I found out first hand what a hot issue this is for both secondary and tertiary students. We had a couple of focus groups with students aged from around 16 to 24 and I was astonished by how passionate they were about their dislike of the current billing arrangements caused by the high termination rates.

Many said that their choice of mobile phone provider has nothing to do with personal choice, but totally dependent on who all their friends are with. Hence in Wellington most students are Telecom and in Auckland most are Vodafone. Again many of them simply will not text (or call) someone on a different network due to the cost.

I sometimes wonder what a mess we would have if ISPs charged a termination rate for e-mails. Imagine having to pay 7c to e-mail someone on a different ISP. You’d end up with only a couple of ISPs probably as no-one would want to send e-mail to people at a different ISP. This might explain why up until recently we have had only two mobile phone providers but many dozens of Internet service providers!

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