Telcos backtracking on termination rates deal

Vodafone wants to delay significant cuts to mobile termination rates until October, while 2degrees has walked away from negotiations over a voluntary deal to cut the fees.

The Commerce Commission yesterday published final offers from Vodafone and Telecom to cut rates and will make a recommendation to Communications Minister Steven Joyce in February on whether the charges should be regulated.

A voluntary deal seemed likely earlier this month after the commission signalled an offer made by Telecom in October could form the basis of an agreement. But Vodafone did not take up the invitation to fully endorse Telecom's cuts.

Both companies have offered to slash their charges for routing calls to customers from their current rate of 15 cents a minute to 0.1 cents a second by the beginning of 2014. They have also agreed to do away with most charges for routing texts to customers.

But while Telecom has offered to cut charges to 0.3c a second from April, Vodafone would not cut rates that far until October.

Telecom acknowledged Vodafone had not moved as far as the commission wanted, but indicated that it still hoped a deal could be done.

Vodafone spokesman Paul Brislen said Vodafone might bring the October cut forward if the commission demanded it. "If it is a deal-breaker, I am sure we could revisit it."

Some industry sources believed 2degrees' withdrawal from the process could scupper a voluntary deal. But others speculated the move was a "publicity stunt" and that the company would in practice have little option but to fall into line behind a voluntary agreement if Vodafone's cuts were accepted.

2degrees stands to gain from reductions in mobile-to-mobile termination fees and has lobbied for regulation. There is speculation Vodafone may make a legal challenge if the commission recommends regulation.

- © Fairfax NZ News