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Substantial cuts proposed in wholesale voice to mobile price

Thursday 23rd December 2010

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The Commerce Commission is proposing a "substantial immediate reduction" in the wholesale price of voice calls to mobile networks.

Telecommunications Commissioner Ross Patterson said the reduction was justified because of unique market conditions in this country.

It was necessary to remove a significant, long-standing and growing barrier to efficient expansion by a small mobile network operator, Patterson said.

"The removal of this barrier will promote vigorous competition for the long term benefit of consumers.'

The commission issued its preliminary views today on the regulation of calls and texts to mobile networks, known as the mobile termination access services.

Its view is that wholesale price for voice calls to a mobile network should be set at a cost-based benchmark, starting at a rate of 4.6c per minute.

For text the commission adopted a bill and keep approach, in recognition of the fact that the cost of terminating text is low and inter-carrier traffic is fairly balanced. The OECD definition of bill and keep sees networks agreeing to terminate calls from other networks at no charge.

The commission is seeking submissions and cross-submissions on the draft determinations. Following submissions, the commission will hold a conference with interested parties before releasing a final determination in March.

In February the commission recommended that undertakings from Telecom and Vodafone on the mobile termination access services be accepted, as an alternative to regulation.

But in April it invited Minister for Communications and Information Technology Steven Joyce to consider in his assessment a new Vodafone product called Talk Add-on, which offered up to 200 minutes to Vodafone New Zealand mobiles and landlines for $12 a month for certain pre-pay plans.

Mr Joyce then asked the commission to reconsider its recommendations.



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