Regulate MTRs, say Labour and 2 Degrees

Third mobile network operator 2 Degrees has swung behind calls to regulate mobile termination rates.

The telco calls mobile termination rates “toll charges” and say New Zealand has some of the most expensive ones in the world.

Pointing to Vodafone’s recent retail offer that provides low calling rates to on-net mobile customers, 2 Degrees chief operating officer Bill McCabe says that this appeared as soon as the Commerce Commission recommended to the minister voluntary undertakings to lower termination rates by the UK-owned telco and Telecom.

McCabe says the Commission must feel gamed by “the incumbent operator”.

According to McCabe, UK termination rates will be cut to around 1¢ by 2014, or roughly 1/6 of the rate that Vodafone and Telecom proposed in their voluntary undertakings.

2 Degrees says lower termination rates means lower retail prices, which is why they are falling around the world.

The controversial Talk plan in question costs $12 a month and gives pre-pay customers 200 minutes of talk-time for calls to landlines and Vodafone mobiles.

Labour ICT spokeswoman Clare Curran issued a statement saying the new offer appears to undercut Vodafone’s termination rate undertakings. She says the telco has essentially increased prices for non-Vodafone customers to call its customers.

This is not a sign of a healthy marketplace, Curran says. She calls on Joyce to regulate termination rates.

A Vodafone spokesperson says Curran “hasn’t read the offer clearly” and says the plans are popular with customers. Furthermore, there are very similar offers in the market today, the spokesperson says.

In 2007, the then Labour minister of Economic Development, Trevor Mallard, rejected the Commerce Commission’s second recommendation to regulate termination rates. Mallard favoured a deal offered by Vodafone and Telecom that would see termination rates drop to 14.4¢/minute and 12¢/minute respectively by 2012, with the telcos promising that all of cuts would be passed on to customers.

The telecommunications commissioner, Dr Ross Patterson, has since then revisited this decision and asked Vodafone and Telecom to improve the offer. Both telcos did so, but Patterson wrote to Minister Joyce after Vodafone’s retail on-net/off-net plan was released, saying it was material.