Challengers, users applaud ComCom

Regulation of mobile ternination is expected to lead to cheaper call charges

Telecommunications challengers and user representatives are welcoming the Commerce Commission's draft recommendation, announced this morning, to regulate mobile termination rates.

Would-be third mobile operator 2 Degrees described the move as a "step in the right direction".

“New Zealanders currently suffer some of the highest mobile prices in the world which is a result of the current high mobile termination rates and lack of competition,” Bill McCabe, 2degrees chief commercial officer, says in a statement.

“When you call or text a friend on a different mobile network, or call their mobile from your landline, their network will charge your operator a fee for connecting the call or carrying the message. This is what we call an MTR or a mobile termination rate. The MTR fee gets passed on to customers via their call charges.”

Above cost wholesale MTRs limit the ability of a new entrant mobile phone company, like s Degrees, to compete, he says.

“Internationally the debate is over. The Commission’s report recognises these issues and has recommended a significant reduction in the current rates so that efficient competition can be allowed to take place among New Zealand’s telecommunications providers,” says McCabe.

However, he issued a note of caution over the length of time it would take to implement the changes.

“The way the process works it looks like it will be 2011 at the earliest before there would be any changes in the market unless we get sensible undertakings from all players," he says.

Orcon, meanwhile, was even more positive in applauding the commission's draft recommendation.

“The Commission has identified that mobile termination rates are too high, and this leads to high costs for consumers. Any move to regulate this will benefit all New Zealanders, and must be applauded,” says Orcon CEO Scott Bartlett.

“However, we feel that the commission’s estimate of mobile termination costs being 7.2 cents is on the high side, given MTR rates in Europe are as low as 3 cents, moving to 1 cent."

Bartlett says he is hopeful that Telecom, Vodafone and 2degrees will propose "more realistic undertakings" that will lead to cheaper calls.

“Our customers will be who benefits most from this as it will enable us to lower their cost to call mobiles from an Orcon fixed line.” Telecommunications Users' Association boss Ernie Newman says he is 100% happy with the draft report, though he, too, wants to see the process accelerated. He says the MTR issue is a chance for the new National government to corrects a mistake made by Labour when in office.

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