Cunliffe asks Telecomms Commissioner to try again

Minister likes the reduced termination charge, but the devil's in the details

Communications Minister David Cunliffe has taken the middle ground in dealing with Telecommunications Commissioner Douglas Webb’s recommendation on mobile termination rates. Rather than accept or reject the recommendation, he has sent it back to the Commissioner for reconsideration.

That process will be done as quickly as possible, but Cunliffe acknowledges that a result is unlikely to emerge much before the end of the year.

Cunliffe says he is “in no doubt that the Commissioner is correct” in the substance of his finding, that the termination rate should be almost halved, from 27 cents per minute to 15 cents. Rather, he is asking for reconsideration of the rather awkward line Webb and his Commerce Commission colleagues have drawn between second-generation services, where termination rates should be regulated downward, and third-generation (3G) services, where they considered a cut might damage investment at a crucial stage for the technology.

As a further complication, Webb has held that Telecom’s T3G should be treated as a 2G service, angering the telco which says it is a genuine 3G network.

While not entirely convinced on this point, Cunliffe says he has been advised by officials that some line can be drawn between old and new technology. “I am advised that a distinction between circuit-switched (voice) and data services might be feasible, among various alternatives,” says his written statement.

Secondly, Cunliffe wants the commission to consider two commercial offerings put forward by Telecom and Vodafone. He declines to reveal the details of these offers, but says they are obviously of a kind that merits consideration but are not close enough to the proposed regulated rate that they should be immediately accepted.

He discloses that the offers — two distinct but similar proposals from the two companies — involved a period of ramping down from current to new levels, but if accepted will allow an earlier start to lowering rates than will a regulated solution, which could take as long as 18 months to come into effect.

“Finally, I want the Commission to give further consideration to how best to ensure that end-users benefit from reductions in wholesale mobile termination rates,” Cunliffe says. At present, there is no guarantee that reductions will be passed on to consumers, and Webb has not asked for one.

“I am determined to see mobile termination rates reduced in a way that is workable and that benefits end users,” Cunliffe says.

He acknowledges the possibility that a commercial settlement and withdrawal of regulatory powers could be abused by a subsequent rise in charges, and suggests that the threat of “designation” (regulation) might be kept alive “pending good behaviour”.

The commercial offer, he indicates, also involves the concept of a “blended 2G/3G rate” that would smooth over the difficult distinction between the two technologies.

Cunliffe declines to discuss the question of distinguishing between voice and data calls or the feasibility of representing voice calls as still “circuit-switched” in an integrated IP world. These are matters for the Commissioner to examine, he says.

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