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Vodafone's $12 plan prompts ComCom rethink

20 Apr 2010

ICT Minister Steven Joyce claims his decision on whether to regulate mobile termination rates is on track, despite the Commerce Commission appearing to back down on its recommendation.

Minister Joyce was speaking at the TUANZ Telecommunications Day and made the promise that he would not take longer than a year to make a decision on whether to regulate MTRs – that is the fee the telcos pay each other to terminate traffic on their networks.

Earlier in the day the Commission had released a statement that it had advised the Minister to take into account a recent $12 Talk Add-on product by Vodafone in the market.

The offer enables customers in certain prepay plans to talk for up to 200 minutes to Vodafone NZ mobiles and landlines for $12 a month.

“The Commission has invited the Minister to take account of the Talk Add-on product in his assessment of whether Telecom’s and Vodafone’s final undertakings should be accepted, or whether it is appropriate to request the Commission to reconsider its recommendation in light of the potential impact of Vodafone’s new Talk Add-on product,” says Ross Patterson, the Telecommunications Commissioner.

In other words, it appears that the introduction of the Talk Add-on product may have changed the Commission’s view on whether regulation is required for Mobile Termination Rates. It is asking Minister Joyce to consider whether Vodafone is taking undue advantage of its ability to offer on-net pricing, - an advantage not enjoyed by new entrant 2degrees because it doesn’t have as large enough customer base. Patterson was one of two commissioners to recommend against regulation

At the TUANZ event, the heads of the regulatory teams at 2degrees and Vodafone were still digesting the news. The companies had been informed last night that an announcement concerning mobile regulation would be made, but were not told the details until this morning.

2degrees chief commercial officer Bill McCade says the Commissioner’s statement is “encouraging.” Vodafone’s GM of corporate affairs Tom Chignell says the company is still digesting the news and referred Telecommunications Review to the brief statement put out by Vodafone: “The Commerce Commission has raised some points and we hope to discuss it with them as soon as possible”

TR asked Chignell if he intended to catch up with Dr Patterson this afternoon - Patterson spoke at today’s event but didn’t mention today’s announcement – and Chignell replied that he might.

Telecom has also put out a statement on its position on MTRS: “Telecom has urged a speedy resolution to the ongoing investigation into mobile termination rates following the release of correspondence between the Minister and the Commerce Commission today,” says Tristan Gilbertson, group general counsel.

“We still prefer a self-regulated outcome, which will provide immediate certainty to the customers and the industry. We acknowledge that the Government is concerned by the extent of Vodafone’s on-net pricing, but consider that this should be investigated separately by the Commission and should not hold up the introduction of lower mobile termination rates for everyone.”

Gilbertson says Telecom’s XT pricing does not employ on-net pricing differentiation.

Meanwhile Minister Joyce is working with Senator Stephen Conroy in Australia to tackle the issue of international roaming. The two are in discussions regarding how much it costs users to access mobile voice and data services when overseas and Joyce says he expects to be “shortly in a position to offer something more substantial”.