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Process for Vodafone’s termination rate offer

Media Release

Issued 17 November 2005/062

Process for dealing with Vodafone’s commercial offer in mobile termination reconsideration

Vodafone has provided to the Commission key terms of its offer to reduce mobile termination rates as an alternative to regulation.

The Commission’s usual practice when evaluating commercial alternatives to regulation is to ensure as much information as possible is made public, to ensure parties’ positions are well tested and the credibility of the process is upheld. In the particular circumstances of this case, and following the High Court’s decision that the Commission could not make public key terms of Vodafone’s offer, the Commission considers that it is appropriate to proceed by protecting Vodafone’s offer through the Commission’s standard confidentiality arrangements.

Parties wishing to have access to the information should apply to the Commission to do so under the terms of the Commission’s confidentiality order.

The Commission will issue "public" and "restricted" versions of both the draft and final reports dealing with the reconsideration. The "public" versions of those reports will not include details of Vodafone’s offer of reduced termination rates nor any figures derived from those rates apart from the total net benefits or detriments. Vodafone’s termination rate information will be contained in a confidential annex to the “restricted” versions of the draft and final reconsideration reports. The Commission will release a public version of its cost benefit analysis model, excluding confidential data.

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The Commission began its investigation into mobile termination in May last year after considering complaints that a potential lack of competition in the wholesale market for terminating mobile calls may be resulting in unreasonably high retail charges for fixed-to-mobile calls.

In June the Commission recommended in its final report to the Minister of Communications that the termination of fixed line voice calls on a cellular telephone network should be regulated but not termination on future 3G networks.

In August the Minister asked the Commission to reconsider its recommendation. The reasons specified by the Minister for the reconsideration were to:

- “… give consideration to the definitional and implementation issues concerning 2G and 3G which have been identified by submitters and independent technical advice and, as part of the consideration, to consider what alternatives are workable and have merit and dynamic efficiency benefits”;

- “… consider the commercial offers made to me by Telecom and Vodafone following the Commission’s Final Report, in comparison to regulation”; and,

- “… give further consideration to how best to ensure that end-users benefit from reductions in wholesale mobile termination rates.”

The Minister also noted that “[i]n addition, as part of its reconsideration, it would be useful if the Commission could consider any other significant points made in submissions to me on the Commission’s Final Report.”

Telecom subsequently made its commercial offer public.

The Commission expects to release its draft reconsideration report and call for submissions before the end of the year.


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