Mobile termination rate decision extreme says Vodafone

Media Release

5 May 2011

Mobile termination rate decision extreme says Vodafone

Vodafone said today that the Commerce Commission has taken an extreme view in its position on mobile termination rate regulation.

The Commission has taken arbitrary benchmark rates which are far below cost. The 4 cent per minute voice rate in New Zealand looks extreme in comparison to current termination rates in Australia at 10c and 11c in Europe. It is half the rate indicated by the only available estimate of cost in New Zealand which was provided to the Commission during the STD process. SMS is unregulated in most countries but the Commission has chosen to regulate and has set a cost which is around a third of our best estimate of cost.

Vodafone General Manager Corporate Affairs Tom Chignell says that below-cost pricing is bad for investment in the telecommunications sector and will, in the long term, impact competition through dampening innovation and technology differentiation. This comes at a time when the government is looking for the industry to step up and invest in next generation broadband networks.

“Competition in the New Zealand mobile market is very healthy. There are three strong mobile operators and 11 brands. 2degrees' remarkable success is testament to this. No one, including 2degrees, is saying that lower mobile termination rates will mean lower mobile calling prices.”

“All parties have the option of requesting a formal review of the prices the Commission has set. Vodafone is likely to seek a review because the evidence shows that the price is significantly below cost.”

ENDS

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