Time to terminate the mobile debate?

OPINION: Should mobile phone users care whether Vodafone, Telecom and the Commerce Commission strike a voluntary deal to reduce mobile termination rates, or regulation ensues?

The fees, charged by telcos to other telcos to route calls and texts to their customers, have become a "household issue" because they appear to have propped up high prices both for mobile pre-pay calls and for calls to mobiles from landlines.

Artificially high charges have also had the effect of encouraging Vodafone, in particular, to set "two-tier" prices for mobile calls and text plans, with lower prices for calls and text between their own customers and higher prices for communicating between networks. That's just a nuisance.

Vodafone and Telecom have both proposed phased but nevertheless steep cuts to termination fees.

A voluntary deal still hangs in the balance. Asked by the commission to iron out the differences between their proposals, the companies settled on putting forward Vodafone's proposal, which the commission last week rejected, rather than cuts earlier offered by Telecom, which would be deeper sooner and which the commission indicated could be the basis for a deal.

Telecom's proposal would see rates fall from 15 cents per minute for terminating calls to 6 cents per minute by 2015, with per second charging and no charge for routing texts to customers unless there were uneven traffic flows between networks.

Telecom and Vodafone's "joint" offer would see rates fall further – to 3c per minute by 2015 – but the cuts would be made more slowly and a 1.2c charge would apply for all texts.

Vodafone commercial development manager Tom Chignell is non-committal on whether it will take up the commission's invitation to rally around Telecom's offer and stave off regulation as the clock strikes midnight, though he is clearly unimpressed by the position the company has been put in.

If a voluntary deal can be struck, it is now clear that it will be not dissimilar to a regulated outcome.

2degrees' market entry has taken much of the heat out of the issue.

Regulators' deliberations over termination rates have cut a deep groove. But the end is in sight – the only question is whether telcos take the short cut or the scenic route.

- © Fairfax NZ News