Consumer NZ and the other members of the Drop the Rate, Mate! campaign are celebrating an historic win for consumers, as the Commerce Commission delivered its recommendation to regulate mobile termination rates to the Minister.

Mobile termination rates are the wholesale costs phone companies charge for calls and texts from other networks.

A new report to the Minister for Communications and Information Technology from the Commerce Commission has recommended the regulation of mobile termination rates. This is a turnaround from its previous advice that undertakings from Telecom and Vodafone would be sufficient.

Undertakings are deals that Telecom and Vodafone have offered to bring these rates down over time.

Earlier this year the Commerce Commission, in a split decision, recommended these undertakings be accepted. However, Vodafone then shot itself in the foot by launching a plan which effectively gave its customers 6c a minute calls, but calls to another network would be charged at 89c. The plan was quickly withdrawn. The commission said while the plan might provide short-term benefits to consumers on larger networks, such plans were likely to result in longer term detrimental effects on competition in the mobile services market.

It changed its mind on accepting the undertakings and recommended regulation.

Consumer NZ CEO, Suzanne Chetwin, said the decision was a win for every New Zealander. “There are almost five million mobile phones used in New Zealand, and every user is going to see the benefits of cheaper costs and better services as a result of this regulation.”

The regulation of mobile termination rates overseas has resulted in cheaper rates for consumers as smaller start-up telcos (like 2degrees in New Zealand) are able to open up the market to competition. But there are a number of issues that will need to be ironed out. For example, there are a large number of regulatory models that could be used, including international benchmarking against countries with similar networks.

Our current average rate is roughly 15c per minute. The Commerce Commission's 2009 Annual Telecommunications Report suggests that a cost-based termination rate could be reduced to somewhere between 5.4c and 8.3c per minute over the next five years.

The Minister, Steven Joyce, has invited submissions on the Commerce Commission's reconsidered final report. Submissions close at 5pm June 29.

 Hadyn Green - Technical Writer

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