Telcos submit final offers on mobile termination rates

Mobile phone companies Vodafone and Telecom have put in their final offers to cut mobile termination rates (MTRs) after the Commerce Commission recommended they be regulated. Photo / Herald on Sunday

Telecom and Vodafone have put in their final offers to cut mobile termination rates (MTRs) accompanied with warnings about the consequences of regulation and the process.

In a draft decision, the Commerce Commission recommended regulation of MTRs and rejected rates submitted by Vodafone, Telecom and 2degrees. The companies have come back with final offers.

2degrees also put in a submission yesterday but accused Telecom and Vodafone of distorting the facts.

MTRs are the wholesale charges mobile phone companies ask for terminating calls or texts from other fixed or mobile networks.

In a revised undertaking submitted to the commission yesterday, Telecom offered to decrease mobile termination rates by 62 per cent over five years for both mobile-to-mobile and fixed-to-mobile calls.

Telecom chief executive Paul Reynolds said his company's strong preference was for an industry-led outcome.

"This would be in preference to regulatory intervention, with the significantly increased costs, the delay in the delivery in services, and the market uncertainty that would necessarily result from it," he said.

Vodafone's general manager of corporate affairs, Tom Chignell, said his company's undertaking provided wholesale termination rates of 1.2c on texts and 12c on voice from April 2010 with a glide-path down to 3c for voice.

"This will take our rates well below those in Australia, the UK and Ireland. The text rate is dramatically lower than most OECD markets."

The reduction in price for texts was an 87 per cent drop, and in voice was 20 per cent in the first year.

"This reduces our wholesale revenues by $50 million in the first year, growing to more than $450 million over five years against prevailing rates.

"This is a material reduction for any business to absorb and will impact on Vodafone's ability to invest in solutions for our customers."

Vodafone said not to expect retail price reductions as a result of these changes, or from the proposed regulation.

- NZPA