3G or not 3G

'We definitely have a 3G network,' protests Telecom

When is a 3G network not a 3G network? When it's used for voice calls, according to the Commerce Commisison.

The Commission has released its recommendation on mobile termination rates, almost halving the price from 27 cents per minute to 15 cents. Currently, the telcos charge each other to terminate calls to a mobile phone — putting New Zealand at the expensive end of the OECD, according to the Commerce Commission.

However, Webb and his team have decided that Telecom's EV-DO network, marketed as T3G, doesn't use 3G for its voice component, and so will be applying the determination to those voice calls made to Telecom 027 phones.

“The Commission’s technical analysis has demonstrated that Telecom’s 027 network does not provide voice calls using 3G technology and, therefore, termination of fixed-line calls on Telecom’s CDMA network will be regulated under the Commission’s proposals, along with calls terminating on Vodafone’s GSM network," says the Commission's statement.

Telecom spokesman John Goulter says Telecom is "looking hard" at the issue of 3G calls.

"We definitely have a 3G network by any international definition so we're treating it as a live issue," says Goulter.

Goulter says the 3G issue is a "hugely tricky" one that will need further work.

Spokesman Mark Scott says the Commission team spent "quite some time" going over the issue of whether to include calls made on Telecom's T3G network or not

However, the Commission has excluded any and all third generation 3G services from its determination in an effort to protect future investment by telcos.

Telecommunications Commissioner Douglas Webb says he wants to "strike a balance" between promoting competition and maintaining incentives for investment.

"The planned investments of the mobile operators in 3G are large and it is important that they have the opportunity to make them without facing the risk of returns being restricted by regulation.”

He says the Commission is not trying to define voice as being different from data in the regulatory sense.

"But you have to consider where this all came from. It's about the cost of picking up your landline phone and calling a cellphone. We've got to address that issue."

Webb's statement says he hopes call charges will fall, even though there is no incentive for the telcos involved to pass on call savings to customers.

Webb says he believes there will be "substantial benefit" to consumers, "despite the likely upward pressure on the price of mobile phone services that may result from the regulation".

The Australian regulator recently lowered mobile call termination rates as well, although the move was described as being a "windfall for Telstra" because it simply chose not to pass on the savings to customers.

The Telecommunications Users Association, which originally asked the Commission to look into termination rates in New Zealand, says it is "well satisfied" with the result, according to chief executive Ernie Newman, but will keep an eye on whether the telcos pass those savings on.

"A key issue now will be to ensure that the savings are passed on to end users and not retained by the fixed-line phone companies, so that the exceptionally high prices New Zealanders have been paying for fixed to mobile calls are brought down to an internationally-acceptable level."

Newman says TUANZ would have liked to see all 3G calls included in the determination.

CallPlus co-founder Malcolm Dick says the decision not to include 3G simply gives the incumbent players a monopoly on the future.

"When are they going to stop buying into this argument that the telcos will stop investing? It's just not going to happen," Malcolm says. "This decision just means we'll wait for it to be implemented until some time next year and by then all the calls will be 3G and it will be irrelevent."

Dick points out that without a different number range for 3G calls his company has no way of knowing whether the calls should be charged at the new lower rate or at the existing higher rate.

"Once number portability is introduced even a new number range won't help because the calls could be to any phone, 2G or 3G."

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