Mobile monitoring report shows continuation of early trends

The Commerce Commission’s second mobile monitoring report released today shows a continued narrowing of the difference between the costs of on-net and off-net calls and text messages. This has resulted in an increase in calling and text messaging between mobile networks.

The Commerce Commission is monitoring the prices of mobile services since it regulated cost-based mobile termination rates (MTR) in May 2011. The Commission is assessing whether there has been a sufficient reduction in the price difference between on-net and off-net calls and texts. This reduction will lower the barriers to expansion for mobile providers identified by the Commission in its MTR Standard Terms Determination.

Today’s report shows that the difference between the average costs of calls within networks and between networks has narrowed, and that traffic between mobile networks has increased, in the three month period from August to October. Mobile operators have also introduced a number of new plans promoting cross-network calling and text messaging.

“The introduction of less restrictive plans, and the continuing fall in the difference between on-net and off-net prices, have resulted in increasing cross-network traffic for calls and texts,” said Dr Ross Patterson, Telecommunications Commissioner.
“The Commission expects the on-net discount to continue to fall. These changes lessen the barriers to switching mobile providers, so consumers should no longer be discouraged from changing networks.”

Between August and October 2011, cross-network traffic increased by 0.8% for mobile calls and by 3.2% for text messages. At the same time, the price difference between on-net and off-net services decreased by 2.6% for mobile calls and by 5.5% for text messages. Since October 2009, cross-net texts have increased from 8.6% to 26.2%, while cross-net calls have increased from 11.4% to 18.4%.

As part of the Commission’s determination on mobile termination access services (MTAS), the Commission is collecting mobile data on a monthly basis which it will report on quarterly. The next report for the November 2011 to January 2012 period is due out in March 2012.
You can view the mobile monitoring reports on the Commission’s website at: www.comcom.govt.nz/mtas-std-monitoring

Background
The MTAS (mobile termination access service) relates to the portion of a call or text message to a mobile phone, once it has been handed over to a mobile company to be transmitted to a mobile phone.

In May 2011, the Commission released its decision regulating mobile termination rates, significantly reducing wholesale termination rates for mobile calls and text messages. Termination rates for calls were cut from approximately 15-17 cents to about 7.5 cents on 6 May 2011, and will be gradually cut to less than 4 cents by 1 April 2012, with further reductions until 2014. Termination rates for text messages dropped to 6 cents from 6 May 2011.

The changes to the termination rates were intended to address competition problems in the wholesale mobile market.

The graduated reduction in termination rates for calls is to allow mobile providers time to adjust retail rates. In providing this graduated reduction, or glide path, the Commission has sought to balance the benefits for consumers in terms of lower prices, while allowing mobile providers time to adjust retail prices.

You can view the final MTAS determination on the Commission’s website at: www.comcom.govt.nz/mobile-termination-access-services-std

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