Commerce Commission recommends regulation of mobile termination access services

In its reconsideration report issued today, the Commerce Commission has recommended under the Telecommunications Act that the Minister for Communications and Information Technology regulate mobile termination access services (MTAS), and not accept undertakings from Telecom and Vodafone.

“The Commission considers that cost-based mobile termination rates, when compared to the offers in the undertakings, will better promote competition in the mobile market and will be in the best long-term interests of end-users,” said Dr Ross Patterson , Telecommunications Commissioner.

“While a plan like Vodafone’s Talk Add-on, which has now been withdrawn, might provide short term benefits to consumers on larger networks, in the Commission’s view, such plans are likely to result in longer term detrimental effects on competition in the mobile services market,” said Dr Ross Patterson . “In the long term, the Commission expects that its recommendation of regulation will ensure that all mobile users will benefit from greater competition, which is expected to result in access to more competitive prices and services.”

“For the first time, retail plans such as Talk Add-on introduced a low on-net tariff to a very broad customer base of a large existing network. Faced with such plans, a small entrant paying the wholesale mobile termination rates contained in the undertakings would be likely to incur significant losses and therefore be unable to compete against the large networks,” said Dr Patterson.

As the report is now with the Minister, the Commission will be making no further comment.
The Commission’s final reconsideration report and associated documents are all available on the Commission’s website at www.comcom.govt.nz/mobiletomobiletermination/