Vodafone: Savings from lowered termination rates not passed on

6#/m MTR reduction results in retail rates going up by 10#/m

Mobile operator Vodafone, which is being scrutinised by the Commerce Commission for the high mobile termination rates it charges for calls to its network, says it has lowered these to an average of 20¢ per minute.

However, despite this reduction, Vodafone regulatory affairs manager Hayden Glass says some telco providers are not passing the savings on to their customers.

Glass says one large New Zealand telco has received a 6¢ per minute reduction in mobile termination rates (MTRs) from Vodafone but, despite this, has chosen to increase its retail rates by 10¢ per minute. Glass would not name the operator concerned but says this is evidence that Vodafone's MTR reductions are not flowing through to retail prices.

Retail rates are set by fixed-line operators, says Glass. And MTR reductions are a "one-way street" for Vodafone.

"Instead of leading to lowered retail rates [this behaviour] just takes money from mobile operators and gives it to the fixed-line telcos."

Both Vodafone and Telecom advocate a commercial solution, in lieu of a regulated one, and promise to pass on 100% of their MTR reductions to their retail rates, so this will be reflected in what customers actually pay.

By April next year, Vodafone expects MTRs for its wholesale customers to have dropped to 17¢ per minute.

Glass says the commission should look to the UK, where Oftel, the regulator there, has just devised a new MTR model for 3G/2G, to replace the existing 2G-only model. At 16.5¢ per minute, rates will be somewhat higher under 3G than under the 2G model.

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Tags mobile termination ratesCommerce CommissionVodafonetelecom

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