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 today but accused Telecom and Vodafone of distorting the facts.
MTRs are the wholesale charges mobile phone companies charge for terminating calls or texts from other fixed or mobile networks.
In a revised undertaking submitted to the commission today, Telecom offered to decrease mobile termination rates by 62 percent 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 TXT and 12c on voice from April 2010 with a glide-path down to 3 cents for voice.
"This will take our rates well below those in Australia, the UK and Ireland. The TXT rate is dramatically lower than most OECD markets." The reduction in price for TXT was an 87 percent drop, and in voice is 20 percent in the first year.
"This reduces our wholesale revenues by $50 million in the first year, growing to more than $450m 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." Do not expect retail price reductions as a result of these changes, or from the proposed regulation, Vodafone said.
"Indeed, we expect low-spend prepay customers may be made worse off. Potential benefit for customers will only be delivered to fixed customers and even then only if fixed operators choose to pass on these savings to their customers." Mr Reynolds said Telecom was disappointed and concerned that the investigation has undermined the regulatory certainty that was achieved under the mobile termination rate deeds agreed by Telecom and Vodafone with the Government just two years ago. "We continue to hold the view that New Zealand's regulatory regime lags international best practice in several important areas." This was affecting investor confidence.
Telecom has also proposed that text mobile termination rates are switched to a so-called bill-and-keep basis, in line with industry feedback. Eric Hertz, chief executive of 2degrees, said Telecom and Vodafone were once again ignoring the commission's recommendations.
"I challenge anyone to find one company, in one industry, in one country on this planet where an incumbent either raised prices or lowed investment (much less both at the same time) in the face of new competition," he said.
He said Vodafone compared their 2015 price offer with current UK prices to say that it was cheaper.
