Decision on Mobile Termination Rates - Minister of Economic Development
Legally enforceable and binding commitments by Telecom and Vodafone that will reduce fixed-to-mobile phone fees will be implemented instead of regulation, as the way forward in delivering an effective and competitive telecommunications market, Economic Development Minister Trevor Mallard announced today.
In April 2006 the Commerce Commission recommended regulation of mobile termination rates - which are the fees that mobile phone companies charge other carriers to terminate calls on their networks. These fees are a significant influence on the cost of providing retail services of fixed-to-mobile calls, so have potential flow-on effects to customers.
"My decision to reject the Commerce Commission's recommendation in favour of an industry solution has followed a process of consultation, review and analysis. I have studied submissions from interested parties and briefings from officials. I have also sought advice on Vodafone's and Telecom's offers, so that I could make an informed decision under the Telecommunications Act 2001," Trevor Mallard said.
"I believe this decision best promotes competition in telecommunications markets for the long-term benefit of end-users of telecommunications services in New Zealand - through an industry solution, in the form of separate binding deeds from each company which are enforceable.
"The government is committed to ensuring we have an effective and competitive telecommunications market as part of our goal of delivering higher living standards through higher economic growth and the transformation of New Zealand into a high-wage, innovative, export-led economy.
"Through the deeds, Vodafone and Telecom have undertaken to reduce the rates of mobile termination services over time, and to provide for reductions in mobile termination rates to be passed on to each company’s fixed calling customers.
"Consumers can expect that the cost of mobile termination will reduce over time. Mobile termination is the most significant cost input into the provision of fixed-to-mobile calls.
"The deeds provide for each company's performance in passing through reductions in mobile termination rates to fixed calling customers to be independently audited each year. Each deed also contains measures to ensure the independence of the verification process," Trevor Mallard said.
"Vodafone's and Telecom's commitments will promote competition in this market. Competition, innovation and investment in the telecommunications sector bring better products and services to consumers.
Under the deeds, Telecom has offered to reduce its mobile termination rate from 20 cents per minute (cpm) to 12 cpm and Vodafone has offered to reduce its mobile termination rate from 20 cpm to 14 cpm, both over the next five years.
These are in line with the Commerce Commission's estimate that the cost of mobile termination in New Zealand would be 15 cpm trending down to 12 cpm in five years time.
The two deeds are available on
http://www.med.govt.nz/telecommunications/mobile-termination/.
In April 2006 the Commerce Commission recommended regulation of mobile termination rates - which are the fees that mobile phone companies charge other carriers to terminate calls on their networks. These fees are a significant influence on the cost of providing retail services of fixed-to-mobile calls, so have potential flow-on effects to customers.
"My decision to reject the Commerce Commission's recommendation in favour of an industry solution has followed a process of consultation, review and analysis. I have studied submissions from interested parties and briefings from officials. I have also sought advice on Vodafone's and Telecom's offers, so that I could make an informed decision under the Telecommunications Act 2001," Trevor Mallard said.
"I believe this decision best promotes competition in telecommunications markets for the long-term benefit of end-users of telecommunications services in New Zealand - through an industry solution, in the form of separate binding deeds from each company which are enforceable.
"The government is committed to ensuring we have an effective and competitive telecommunications market as part of our goal of delivering higher living standards through higher economic growth and the transformation of New Zealand into a high-wage, innovative, export-led economy.
"Through the deeds, Vodafone and Telecom have undertaken to reduce the rates of mobile termination services over time, and to provide for reductions in mobile termination rates to be passed on to each company’s fixed calling customers.
"Consumers can expect that the cost of mobile termination will reduce over time. Mobile termination is the most significant cost input into the provision of fixed-to-mobile calls.
"The deeds provide for each company's performance in passing through reductions in mobile termination rates to fixed calling customers to be independently audited each year. Each deed also contains measures to ensure the independence of the verification process," Trevor Mallard said.
"Vodafone's and Telecom's commitments will promote competition in this market. Competition, innovation and investment in the telecommunications sector bring better products and services to consumers.
Under the deeds, Telecom has offered to reduce its mobile termination rate from 20 cents per minute (cpm) to 12 cpm and Vodafone has offered to reduce its mobile termination rate from 20 cpm to 14 cpm, both over the next five years.
These are in line with the Commerce Commission's estimate that the cost of mobile termination in New Zealand would be 15 cpm trending down to 12 cpm in five years time.
The two deeds are available on
http://www.med.govt.nz/telecommunications/mobile-termination/.