Vodafone's retail plan could trigger MTR regulation

Commission asked to reconsider original recommendation

Communications Minister Steven Joyce has sent back the Commerce Commission's recommendation to accept Telecom and Vodafone's commercial offers to lower mobile termination rates in lieu of regulation, after the latter telco launched a cheap retail plan for on-net calls.

Joyce is asking the regulator to reconsider its recommendation, as Vodafone's plan that offers 6c/minute calls on the provider's mobile network and to landlines "may be material and may have the potential to affect the basis for the Commission's recommendation," according to a statement sent out to media this morning.

The minister's office says he is required to make the decision that best promotes competition in the telecommunications market to the long-term benefit of users, under Section 19 of the Telecommunications Act. Joyce says he would like the Commission to consider any relevant detail since their recent report was sent before its reconsidered advice is finalised.

The question whether or not to regulate termination rates, or the fees telcos charge to land traffic on each others' networks, has been churned over by successive governments since the new millennium. Labour minister Trevor Mallard decided against regulation, and opted for commercial offers to reduce termination rates instead. However, the Commerce Commission has since then revisited the issue, aiming to force down the termination rates with improved offers from Vodafone and Telecom. Third network operator 2 Degrees also put forward a draft offer, but withdrew it later on during the regulatory discussions.

These offers were put forward to the minister, with a recommendation that he accept them. However, Vodafone's recently announced plan for pre-pay users that costs $12 a month and provides 200 minutes of talk time for on-net and landline calls appears to have triggered a government rethink on whether or not the termination rate offers from the telcos are adequate.

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Tags VodafonetelecomSteven JoyceCommerce Commissionmtr

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