2degrees welcomes Ministers call for reconsideration of mobile termination fees

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2degrees welcomes the announcement today by the Minister for Telecommunications, Steven Joyce, that the Commerce Commission should reconsider its recommendation to impose above cost Mobile Termination Rates (MTRs) in light of recent market changes.

2 DegreesMTRs are the toll charges paid by telephone companies to connect calls to mobile networks, and New Zealand has some of the most expensive in the world. The Commerce Commissions investigation into the possible regulation of MTRs has been ongoing since May 2008.

2degrees Chief Operating Officer, Bill McCabe, says Clearly this is a complex issue, however recent retail offers have undermined the basis of the Commissions recommendation. The Minister is right to request that it reconsiders its views.

The voluntary undertakings were supposed to represent the best commercial offers from the large mobile operators as an alternative to regulation but as soon as the Commission had recommended these rates to the Minister, Vodafone then started offering much lower rates for on-net calls to its own retail customers. That is the major cause for the Ministers concern as discriminatory pricing is accepted worldwide as a significant barrier to competition. The Commission must feel gamed by the incumbent operator.

The Commissions task is now simple. If the basis for their initial recommendation is now flawed, then it must recommend regulating these access prices to cost as already supported by Commissioner Mazzoleni and consistent with international best practice MTRs are regulated everywhere else in the world. It should be able to provide the Minister with a new recommendation within days rather than weeks. Delay merely plays into the hands of the incumbents and we are encouraged that the Minister has asked for a decision as soon as possible.

Lower termination rates mean lower prices for consumers and more competition. Thats why they are tumbling fast around the world. Only last month the UK regulatory authority, Ofcom, announced plans to cut rates in the UK to about 1c by 2014, which is around 1/6 the rate proposed by the New Zealand incumbents.

Paul Matthews
Senior Account Manager
paulm@bulletpr.co.nz
www.bulletpr.co.nz

Level 2, 8-10 Whitaker Place
P O Box 2051
Auckland 1140, New Zealand
t.+64 9 306 4008,m. +64 21 403 181
f.+64 9 3734374

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