Mobile rates to come down

The Commerce Commission has decided (by a rare 2:1 split) not to recommend regulation of mobile termination rates, as the undertakings by telcos is deemed satisfactory.

The Government is consulting on the recommendation. Regardless of whether it goes with commercial undertakings or regulation, it means prices should drop. The mobile termination rate is the rate charged to receive and terminate a call to a mobile phone, so it acts as a floor on charges.

The mobile termination rate is 17.53c a minute for Telecom and 17.90c for Vodafone. Under the final undertakings these will drop to 10c in 2011, 9c in 2012, 8c in 2013 and 6c in 2014.

That is good for consumers, but not so good for competition as it means it is not until 2014 we get them to 6c. If they recommended regulation then one might get to that level in 2011.

As for text message termination rates, the final undertakings are to move to bill and keep (ie no termination rate) so long as traffic is balanced within 7%.

Reading the executive summary, I was interested to find out that 80% of all voice calls and 90% of all SMS traffic is on the same network. This is much higher than in other OECD countries, and is a result of the high MTRs we have had.