Telcos charge less than wholesale for mobile calls

Technology overtakes regulator

Telecom and Vodafone have slammed the Commerce Commission’s proposed mobile termination rates (MTR) regulation as flawed and pointless. However, it appears that both telcos already charge overseas providers less than the going wholesale termination rates in New Zealand, something the Commission did not consider before sending off its MTR report to communications minister David Cunliffe.

New Zealand customers who are able to set up Voice over IP connections could save on mobile calls by routing them overseas. VoIP providers like Pennytel charge end-customers between 22 and 25 cents per minute for calls to Telecom and Vodafone’s mobile networks, with no GST added on top and no fixed monthly fees — lower than the current the current wholesale MTR of 27¢ per minute that the Commission wants to regulate.

Computerworld understands that the wholesale rate for overseas providers to land calls on New Zealand mobile networks is around 15 cents per minute.

It is not just end-customers that can take advantage of lower international rates. Telecommunications analyst Paul Budde says “least-cost call routing” has been in place for many years now, and that telcos with global presence like Telecom and Vodafone can send customers calls the cheapest possible way with ease.

This means calls can be routed to countries with cheap providers over the PSTN and landed on mobile networks via VoIP with low termination rates below the current NZ MTRs.

Commerce Commission communications adviser Jacqueline Martin says the low wholesale rates available to overseas providers and least-cost call routing were not raised by any of the submitters. Thus, Martin says, the commission didn’t look at them when drawing its conclusions.

Vodafone spokeswoman Sarah Rogan says the retail charges the mobile operator sets are not related to the MTRs.

Furthermore, Rogan says Vodafone has a direct interconnection arrangement with Telecom and that is how it sends calls to 027 customers.

Telecom was contacted for comment, but did not respond.

New Zealand mobile calling rates are some of the highest in the OECD and last year, Cunliffe promised they will come down “one way or the other”.

Prime Minister Helen Clark recently echoed Cunliffe’s sentiment in media interviews, saying the current regulatory process is too cumbersome and that the government needs to cut right through it.

Mobile customers here pay between 49 cents and $1.39 a minute depending on the type of call and plan (with or without fixed monthly charge) they’re on, whereas Vodafone and Telecom charge each other 27¢ per minute for landing calls on each others’ networks.

Cunliffe asked the Commerce Commission to reconsider a report last year, so as to include calls terminated on 3G networks as well as 2G ones, and to take into account commercial offers from the telcos.

In the previous report, the commission proposed to slash the MTRs to 15¢ immediately but has not said how much it proposes in the new report.

In response, the telcos have offered a gradual reduction with 1¢ per minute each year in lieu of regulation.

Despite the proposed cut in wholesale rates, the commission thinks retail rates will increase somewhat as the telcos may not pass on the lowered costs to customers.

Vodafone spokeswoman Sarah Williams confirmed this will happen, should the commission go ahead.

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