18 December 2009
Vodafone delivers final
SMS termination at zero, voice cut by two thirds
Vodafone has submitted what it hopes will be the final Undertaking as part of the Commerce Commission’s review of mobile termination rates.
On December 3 the Commission asked operators to work together to align their undertakings into one offer that would serve as an alternative to regulation in the Commission’s final report. Vodafone has worked to meet the Commission’s requirements and has aligned its undertaking rates with Telecom, at the levels the Commission indicated were likely to be accepted.
Vodafone had offered to reduce SMS termination rates to zero if traffic is in balance starting October 1, 2010. Previously Vodafone had offered to reduce SMS rates to 1.2 cents/TXT and has now agreed to move entirely to so-called ‘bill and keep’, making it cheaper for third party networks to terminate TXT messages on Vodafone’s network.
In terms of voice calls, Vodafone has agreed to reduce termination rates by 46% in the first year alone and will move rates down to 6 cents per minute by the start of 2014.
Vodafone’s GM of corporate affairs Tom Chignell says these rates will be based on a ‘second plus second’ rounding rather than ‘minute plus second’ basis.
“The impact to Vodafone’s business would be an immediate $50m reduction in revenues increasing over the period of the Undertaking. In a flat or declining market this is a non-trivial move.
“Vodafone has expressed concerns throughout this process that the Commission’s work is lacking in several areas and this continues to be a concern. However the Commission is both prosecution and judge in this area and, in the interests of concluding what has been a lengthy process, Vodafone has offered this Undertaking in line with the Commission’s recommendations.”
Vodafone previously offered rates based on minute plus second (that is the first minute of a call is paid in full regardless of the duration). The Commission asked that we re-configure to use second plus second billing. The table below reflects the proposed rate and what it would have been under minute plus second rounding.