FryUp: Vodafone's feet to the regulatory fire?

Ihug backs Comcom on 'bill and keep'; and well done Silverstripers

Vodafone’s feet to the regulatory fire?

Telecom fumbling and falling in the NZ mobile market has left Vodafone as the dominant player, says telco analyst Paul Budde, in response to the latest Commerce Commission report on mobile termination rates.

This is evidenced in Vodafone’s share of mobile traffic potentially being as high as three-quarters of the total, with 85 per cent of that being on-net – that is, the traffic stays between Vodafone customers. It’s no surprise then that Vodafone’s seeing record profits and revenue hiked 10% to $1.5 billion. Vodafone’s mothership gets a nice, juicy dividend from its NZ operation, to the tune of $742 million. For comparison, the entire New Zealand mobile market is valued at $2.3 billion.

The long and short of this situation is that Telecom’s coming up to some more pain when it launches its WCDMA network next year, as it tries to wrestle back market share from Vodafone. As for a third entrant, well, it’ll be fighting over the crumbs from the rich operators’ table. Needless to say, this is bad news all round for consumers, and the Commerce Commission is starting to fret.

What to do then, to inject some competition into the mobile market? Budde suggests that the Commission should seriously consider a “Bill and Keep” model. This is a pricing scheme that the OECD defines as each network agrees to terminate calls from the other network at no charge.

As it is now, the operator from whose network a call originates pays the network on which said call terminates. Because of this, retail calling rates can never drop below a certain level, namely that of the wholesale mobile termination rates or MTRs.

If Vodafone has 75% of the total traffic and keeps most of that within its own network, MTRs act as an encumbrance to competition – therefore, Budde reasons, it would make sense to do away with the MTRs all together, and go with Bill and Keep, a sentiment echoed by TUANZ.

We already have Bill and Keep for fixed to fixed network calls, so why not have it for mobile as well? Budde says this is a radical change that no other developed jurisdiction has attempted to implement, but maybe that’s what we need? Europe is moving towards Bill and Keep, after the EU took a chainsaw to existing termination rates.

And indeed, through remarkable foresight, ihug agrees with Budde, in a submission to the Commerce Commission:

“Similarly the 'bill and keep' model that now applies to 'fixed to fixed' local interconnection provides the same efficient pricing regime for local calls.

"ihug would prefer a similar regime in the fixed to mobile environment, although this appears unlikely at the present. It is clear that if the existing regime for fixed to mobile continues, termination rates will not be reduced by the network operators who currently enjoy monopoly rents.

"There is no incentive for these operators to modify their rates. They have not done so for the last seven years and without regulated controls, they are unlikely to do so in the future.”

The above was of course submitted in the 2004, before Vodafone bought ihug.

- Mobile giant rings up record profit

- ihug/iinet Comments on the Commerce Commission’s Mobile Termination Issues Paper

Web square eyes

The SilverStriped Ones are happy that their solution held up so well for the Democratic National Convention, despite over three million visitors hitting the site in just four days. Well done, boys and girls.

Web server stats aside, what struck me is how video rules both on the web (350,000 hours served via, with over 300 high-definition clips on the site) and over Ye Olde Television, where 38.4 million viewers apparently watched Obama’s acceptance speech.

And, TVNZ has gone ahead and YouTubed the Clark-Key election debate this year, with the webcam crowd being allowed to ask video questions.

Doesn’t look like the revolution will be televised then, broadcast or internet-wise, only the usual mainstream politics.

- Silverstripe blog: 3.2m visits in four days

- DNC 08: Americans Come Together For Change In Record Numbers Through Multiple Mediums During Democratic National Convention

- OneNews-YouTube Election Debate


Fiction rule of thumb


Robert X. Cringely

RealDVDs, surreal law suits

Well, that didn't take long. One day after RealNetworks releases its DVD copying software, lawsuits are filed. Who's right, who's wrong, and where do movie fans fit in? Cringely has some thoughts. Like a Brachiosaur sinking into a tar pit, the recording industry as we've known it for the past 70 years is very nearly extinct. But unlike dinosaurs, the RIAA is trying to drag everyone else into the pit with it. As a long-time print journalist, I actually feel their pain - slightly. Newspapers and magazines are following CDs into the fossil fuel bin. Some, like InfoWorld, will successfully swap paper for pixels; most won't. Unless you own a blogging empire, it's not a good time to be a publisher. (But, with a few random exceptions, publications haven't been suing their customers for unfettered article swapping.) The movie industry takes less heat for prosecuting alleged movie pirates, but it's no better than its reptilian cousins on the audio side. That's about to change. The MPAA will soon supplant the RIAA as Public Enemy No. 1 for people who believe that when you buy a copy of something, you actually own it. Case in point: The dueling lawsuits between the movie studios and RealNetworks over the RealDVD software. Interestingly, it was Real who sued first - launching a preemptive strike by asking courts in Northern California to declare its DVD copying license legal. It only took a few hours for the studios to respond in kind. Greg Goeckner, general counsel and designated spokesmodel for the MPAA, churned out a few choice sound bites [PDF]: RealNetworks’ RealDVD should be called "StealDVD”... . The major motion picture studios have been making major investments in technologies that allow people to access entertainment in a variety of new and legal ways. This includes online video-on-demand, download-to-own, as well as legitimate digital copies for storage and use on computers and portable devices that are increasingly being made available on or with DVDs. Our industry will continue on this path because it gives consumers greater choices than ever. Except, of course, the choice to take a movie you paid for and make decisions about how and where you watch it. The movie studios claim Real's software violates the Digital Millennium Copyright Act because it circumvents copy protection technology built into DVDs. Actually, Real Networks licensed the software that lets them legally de-crypt and re-encrypt DVD content. If they're guilty of violating the DMCA, so are the manufacturers of every $50 DVD player out there. Essentially, Real's software allows you to take a DVD you own and make a legal copy of it on up to five machines. Unless you've got the hacking skills of a Jon lech Johansen, you can't share these copies with anybody else without handing them the drive you copied the movie to. And if you really wanted to swap movies illegally, there are, oh, about a gajillion easier ways to do it than by abusing RealDVD. The MPAA's other argument: Customers will "rent, rip, and return" DVDs from Blockbuster or Netflix. So instead of spending $10 to $20 for the movie at Wal-Mart, you drop $5 at Blockbuster and make copies you can watch on your computer. Real admits that's possible (and illegal under the terms of its license). But doesn't that sound like an awful lot of trouble? If I really want to watch a movie over and over and over, I'll just keep putting it back in my Netflix queue (or simply not return it after I get it the first time). The people who still go to Blockbuster are probably the least likely to have heard of RealDVD, let alone use it. You can argue legalities all day long (and, if you're a copyright attorney, make hundreds of dollars an hour doing it). But the fact is that the recording and film industries have been trying to kill off the concepts of fair use and the creative commons for decades. Today's copyright laws are written by industry lobbyists and handed over to friendly members of Congress for a rubber stamp. They do not represent the will of the people.

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