Mixed reactions to Minister's termination decision

A wise move or an election year cop-out? That depends on who you ask

Small and large communications companies display very different reactions to Communications Minister David Cunliffe’s decision to return the recommendation on mobile termination rates back to Telecommunications Commissioner Douglas Webb for reconsideration.

This pushes an eventual decision comfortably to the other side of the election, as Slingshot founder Annette Presley points out.

“It appears that these are tactics being used to delay any decisions until after an election when everything may again change,” she says. “In the meantime the consumers suffer and Telecom and Vodafone benefit.

“I find it amazing that after16 months of investigation, during which time Vodafone and Telecom have continued to charge more than they should for calls to mobiles, an eleventh-hour voluntary offer from the mobile operators, the details of which are not publicly available, is being considered.”

Cunliffe says it would be inappropriate to disclose the details of the two mobile companies’ offers of a “commercial” solution, as these too will be referred to Webb for consideration.

The Minister makes it clear that he agrees with Webb’s basic decision that a termination rate of 15 cents a minute is an appropriate cut from the 27c/min currently charged. He is more doubtful, however, of the detail of the decision, which stipulates that the price control should not apply to “third-generation” networks for fear of stifling new investment, yet asserts that Telecom’s T3G is not a real 3G network because voice is carried on lesser bandwidth. Cunliffe has asked Webb to come up with a formula for differentiating between voice and higher-bandwidth data traffic in charging.

The proposals put forward by Telecom and Vodafone, although distinct, are similar, Cunliffe says, and involve the concept of a “blended 2G/3G rate” somewhere between the charge levels that the Commissioner envisaged allowing for the two types of network. While he declines to talk about the numbers, he says they are obviously low enough to merit consideration, but high enough not to spark immediate acceptance.

TelstraClear’s industry and regulatory affairs manager, Grant Forsyth, takes a more favourable view of the Minister’s decision. He also says he welcomes the commercial offers from Telecom and Vodafone, and looks forward to seeing the detail.

“Commercial offers should be considered in an open way, within the framework of regulation to ensure consumer-friendly outcomes are achieved,” Forsyth says.

“It’s important to remember that it took regulatory pressure to drive these commercial offers, and designating fixed-to-mobile termination will not preclude commercial offers and settlement. Regulation will ensure commercial agreements support the interests of end users.”

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