Process for determining mobile termination rates announced

The Commerce Commission has commenced the process for determining the wholesale price for terminating mobile calls and text messages. This follows the announcement in August 2010 by the Minister for Communications and Information Technology, Stephen Joyce, that he had accepted the Commission's recommendation to amend the Telecommunications Act 2001 to allow the regulation of mobile termination access services.

The Commission expects that  regulation of these termination rates will lead to  greater competition at the retail level, as mobile and fixed line phone companies pass on the cost-savings to New Zealanders.

The first stage of this process will be to hold a scoping workshop for the telecommunications industry and other interested parties. The Commission has today issued a letter outlining the matters to be discussed at the scoping workshop.

The key issue raised in the Commission's investigation into mobile termination access services was the wholesale price charged for termination. There was widespread acceptance that differences in non-price terms in the existing commercial agreements used by the industry were not material.

"The Commission has proposed that the final regulation should focus solely on setting a wholesale price. Unless the industry provides compelling arguments to the contrary, non-price terms such as operational arrangements and technical specifications will continue as negotiated by the industry," said Dr Ross Patterson, Telecommunications Commissioner.

"The focus on price terms in the standard terms determination (STD) will address a key driver to New Zealand's high mobile retail prices," said Dr Patterson.

After the scoping workshop, the Commission will issue a notice to the access provider(s) to submit a proposal for standard terms to govern the supply of mobile termination access services. Following consultation on the proposal, the Commission will issue an STD that specifies the regulated price for the supply of the mobile termination access services, and sets out any additional terms or conditions on which the service must be supplied.

The Commission expects the STD process to be completed by 31 March 2011.  

Background

Under the Telecommunications Act 2001, the Commission can only commence a standard terms development process for services that are specified in Schedule 1 of the Act.

On 16 June 2010, the Commission recommended in its reconsideration report that the Minister allow for the regulation of mobile termination access services (including the price for those services) by adding the services to Schedule 1 of the Act, and to reject undertakings offered by Telecom and Vodafone in lieu of the proposed regulatory change.

On 4 August 2010 the Minister for Communications and Information Technology, Stephen Joyce, announced that he had accepted the Commission's recommendation to amend the Telecommunications Act 2001 to allow the regulation of mobile termination access services.

The mobile termination access services were added to Schedule 1 of the Act as a result of the Telecommunications (Mobile Termination Access Services) Order 2010, which came into effect on 24 September 2010.

Subpart 2A of Part 2 of the Act specifies the process the Commission is required to follow in making a standard terms determination, which sets the terms on which a designated access or specified service must be supplied with reference to all access seekers and access providers of the service.

The indicative timeline for the standard terms development process is as follows: