In a draft reconsideration report issued today, the Commerce Commission has indicated that its preliminary view is to recommend to Communications and ICT minister Steven Joyce that he regulate mobile termination access services, and not accept undertakings from Telecom and Vodafone.
In a media release announcing the report, the commission notes that, following the its final report released in February 2010, Vodafone announced a new Talk Add-on product. The Minister then requested that the Commission reconsider its earlier recommendation that Telecom and Vodafone’s final undertakings should be accepted in light of that and any other relevant retail offers released since the Commission’s final report.
The Commission’s preliminary view in this reconsideration is that, in light of the new Talk Add-on plan, the mobile termination rates contained in the final undertakings offered by Vodafone and Telecom will not address the competition concerns identified by the Commission during its mobile termination access services (MTAS) investigation.
“The on-net retail pricing component of Vodafone’s new Talk Add-on plan, offered since the final MTAS report, perpetuates the barrier to expansion that the final undertakings, if accepted by the Minister, were designed to remove,” says Dr Ross Patterson, Telecommunications Commissioner.
“While lower retail prices are generally good for consumers, the competition concern which arises in relation to the Talk Add-on plan is the combination of low on-net retail prices and above-cost wholesale mobile termination rates which creates a barrier to efficient expansion by a new entrant,” says Patterson.
“In light of such developments, the Commission’s preliminary view is that if cost-based mobile termination rates were put in place, then all mobile operators would be able to vigorously compete in the retail market and provide consumers with competitive and innovative calling products,” he says.
“Our preliminary view is that the introduction of Vodafone’s Talk Add-on plan is evidence that the assumptions made by Commissioner Gowan Pickering and me in the Commission’s final report, in respect of Vodafone’s future behaviour, have been undermined. As a consequence, the conclusion that ‘the competition concerns identified by the Commission would be addressed in a timely manner by acceptance of the final undertakings’, which was based on those assumptions, cannot stand,” says Patterson.
The Commission is now inviting submissions on the draft reconsideration report. Submissions are due with the Commission by 5pm on May 19.