Decision on mobile termination rates

The Minister for Communications and Information Technology, Steven Joyce, has accepted a Commerce Commission recommendation to regulate mobile termination rates.


He says regulation will improve competition in the mobile market and result in lower prices for mobile phone users.


Mobile termination rates are the wholesale prices charged by a mobile network operator (such as Telecom, Vodafone and 2degrees) for providing services to customers from other network operators.


Under Section 19 of the Telecommunications Act the Minister is required to make the decision that best gives, or is likely to best give, effect to the purpose of Part 2 of the Act - that is, to promote competition for the long-term benefit of end-users of telecommunications services.


Mr Joyce says he considers that accepting the Commission's recommendation meets this test and in this case will lead to lower mobile termination rates and more competitive mobile pricing plans for consumers.


"Following today's decision I look forward to New Zealand mobile users enjoying more competition between operators and better prices."


The next step is to add mobile termination access services to schedule 1 of the Telecommunications Act by regulation. The Commerce Commission will then go through a process to set prices and other terms which mobile carriers must offer. This process will likely take a few months.


Copies of the Commission's report can be downloaded from the Commerce Commission's website (www.comcom.govt.nz).





Questions and answers


What is mobile termination?


Mobile termination refers to the services provided and the prices charged by a mobile network operator (such as Telecom, Vodafone and 2degrees) to another network operator when a customer of one network calls or texts another.


What is the current situation?


Mobile termination is currently an unregulated service. Prices, and other terms are negotiated commercially between a mobile network operator and another (fixed or mobile) network operator. Since April 2007, voice calls from New Zealand fixed-line networks to Telecom and Vodafone mobile phones have been subject to price and non-price terms set out in deeds poll - voluntary agreements signed by Telecom and Vodafone.


When will this decision come into effect?


The next step is to add Mobile Termination Access Services to Schedule 1 of the Telecommunications Act by Order in Council. After the Order in Council comes into effect the Commerce Commission will commence a 'standard terms determination process'. This process will establish the prices and other terms which mobile network operators must offer to other network operators for mobile termination services. The standard terms determination process can take several months.