Media Release
12 May 2009

New Zealand mobile termination rates among the best in the world

Comments that frame New Zealand’s mobile termination rates as being expensive compared with termination rates in other parts of the world are erroneous and misleading, says Vodafone’s GM of Corporate Affairs, Tom Chignell.

Referring to comments made at a Telecommunications Users Association (TUANZ) conference held today in Wellington, Chignell says New Zealand’s termination rates are in line with the rest of the developed world and are better than most European countries.

“Vodafone’s current rate of 15c/minute compares very favourably with figures from the European Regulators Group (ERG) which compares rates across the EU. Our current rate puts us on a par with the UK and ahead of Germany, Denmark and the Netherlands.”

In fact, New Zealand’s termination rate is lower than some of the most competitive countries in Europe like Denmark, the Netherlands, Poland and Portugal.

“Mobile termination rates are often held up to be some kind of silver bullet in lowering retail rates but they bare very little relation to the retail rates around the world as measured by the OECD. Countries with high termination rates can have low retail rates, like Denmark and the Netherlands, and countries with low termination rates, like the US, can have some of the highest prices on record,” says Chignell.

New Zealand stands out in the OECD in that it has a legally binding Deed of Undertaking signed by both Telecom and Vodafone to ensure 100% of any savings earned through reductions in MTRs are passed on directly to customers.

“In the first 21 months of our Deed, customers saved $21 million and over the five year period the Deed is supposed to run that would equate to $90 million in savings. That’s at risk if the Commerce Commission decides to regulate the industry.”

NOTES TO EDITORS:

The European Regulators Group is a collection of regulators from the European Union. Its aim, as defined on its website (www.erg.eu.int), is to:

[P]romote the development of the internal market for electronic communications networks and services, and to seek to achieve consistent application, in all Member States, of the provisions set out in the Directives of the new regulatory framework.

The ERG realises that different nations apply different rates and that comparing one country to another in terms of mobile termination rates can be troublesome at best. While one country may charge using a “minute plus second” regime, another will use “second plus second” or even have a flagfall fee.

the ERG takes the total termination charge for a three-minute call and divides it by three to get a per-minute rate. This means comparisons between regimes are all based on the same level playing field.

The figures are taken from the ERG’s July 2008 report (the latest one available) available at: http://www.erg.eu.int/doc/publications/erg_08_41_mtr_update_snapshot_081020.pdf (see attached)

The OECD’s retail price benchmarking is taken from the Teligen reports relied upon by the Commerce Commission for its quarterly benchmarking reports.

ENDS