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Telecom And Vodafone Responses “Laughable”

Wednesday 12 August 2009
For Immediate Release


Telecom and Vodafone stand accused of making laughable claims about the market effects of cutting mobile termination rates (MTRs) in response to yesterday’s highly successful launch of Drop the Rate, Mate!

A spokesman for Drop the Rate, Mate!, Matthew Hooton, said the campaign’s call in support of Communications and Information Technology Minister Steven Joyce ultimately accepting the Commerce Commission’s likely recommendation to make MTRs internationally competitive had the support of 81% of New Zealanders, and more than 5,000 people had already signed up at

Mr Hooton said Drop the Rate, Mate! knew that Telecom and Vodafone would say and do anything to maintain the current regime - which has cost consumers more than $2.5 billion over the last decade - but their immediate resort to wilfully misleading statements is suggestive of early desperation.

“Telecom and Vodafone know that everywhere MTRs have been cut, retail prices have fallen, usage has increased and service has improved,” Mr Hooton said. Page 2 of 3

“In the UK, for example, Vodafone’s lobbyists in 2002 bleated that, if MTRs were cut, marginal subscribers would leave, total call volumes would fall, prepaid handset prices would rise and up to 15 million customers would be forced to leave the market.

“In fact, the opposite happened: prices have fallen, mobile penetration has soared, total call volumes have leapt, and handset prices have never been lower. And Vodafone knows it.

“Vodafone’s corporate lobbyists in New Zealand are just peddling lines from the same global playbook it uses everywhere its market share is threatened.”

Mr Hooton said Vodafone also appeared to have resorted to purchasing paid space on Google in an effort to distort search enquiries for Drop the Rate.

Just as laughable, Mr Hooton said, was Vodafone’s claim that the Commerce Commission believed retail prices would increase by $180 million over five years if MTRs were reduced.

“In fact, the Commerce Commission draft conclusions are absolutely indisputable:

• A reduction in MTRs is likely to increase competition

• This will reduce retail prices and offer consumers substantial long-term benefits

• MTRs should be cut by the Government.”

Mr Hooton said Vodafone seemed to be relying on a figure in a table on page 191 of the report – a table which itself suggested the benefits to consumers of cutting MTRs would be between $93 million and $276 million. Page 3 of 3

“Taking that figure so dramatically out of context is grossly misleading. The truth is that the Commerce Commission is saying the opposite of what Vodafone claims,” he said.

Commenting on Telecom, Mr Hooton said the company had initially been reported as pouring scorn on the students, workers, farmers, Maori and consumers who support the Drop the Rate, Mate! campaign.

“Telecom now seems to be saying that it needs to rip off mobile consumers in order to fund more investment in the industry,” he said. “Good luck to Telecom arguing that a cosy duopoly leads to more investment in services and coverage than a more competitive environment. If that were true, New Zealand would already have the finest telecommunications services in the world, and we don’t. In fact, the only time Telecom and Vodafone seem to invest in better coverage and better services is when there is the prospect of competition.”

Mr Hooton said Drop the Rate, Mate! expected Telecom and Vodafone would resort to even more ludicrous claims in the months ahead.

“Hundreds of millions of dollars of corporate profits are at stake and Telecom and Vodafone are not going to see mobile termination rates lowered without the most vicious fight,” he said.


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