News has just come in that the Commerce Commission (New Zealand) have formally announced changes to mobile termination rates. This alters the wholesale rates for landline to mobile calling, and mobile to mobile calling, and also SMS message (Text message) rates.
Current wholesale mobile calling rates are above 15c/minute on average - that will change to less than 4c/minute by April 2012 for all carriers (and reducing further in 2013 and 2014). This cut of more than 2/3 has been expected for some time and some providers such as 2degrees advise they have already taken the reduction into account with their existing rates.
While wholesale rates will be less than 4c/minute next year - the cuts begin almost immediately (6 May 2011). The schedule for wholesale calling rate changes is as follows:
- 6 May 2011: 7.48c/minute
- 1 Oct 2011: 5.88c/minute
- 1 Apr 2012: 3.97c/minute
- 1 Apr 2013: 3.72c/minute
- 1 Apr 2014: 3.56c/minute
SMS text message prices will also be cut at a wholesale level - from 9.5c currently to just 0.06c - effectively immediately. I anticipate this drop to almost free is more than likely to lead to further reductions in retail rates, particularly for 'text bundles' (pre-purchase of large quantities of text messages) from 2degrees Mobile.
In my opinion, the determination is expected to have a dramatic impact on the NZ mobile industry in three areas:
- Profitability: Reduces the long term profit margins of the currently dominate players in New Zealand's mobile market - Vodafone NZ and Telecom NZ (who own the XT Network). Vodafone have disclosed today the new rates will cost them $140 million in revenue - which will have a dramatic impact on their profitability in the New Zealand market.
- Competition: The reduced wholesale rates will create a more level playing field and makes it easier for new and recent entrants in the mobile market to gain significant market share (such as 2degrees Mobile)
- Calling Rates: Rates to call mobiles will come down. What is not clear yet is if it will just be rates from landline and VOIP (Internet calling) carriers - or if mobile telcos will move their rates down much in the short term. Ther
The 358 page Mobile Termination Access Services (MTAS) report released by the Commerce Commission is fairly heavy reading - I expect to update this news piece with any more information I find once I've digested it. In the meantime you can download it here. The topic of Mobile Termination Rates was discussed on Episode 9 of the NZ Tech Podcast - and will be discussed in more detail in the upcoming episode next week.
In the meantime - I'm keen to hear others opinions and impressions of what this reduction will mean for consumers, businesses and the carriers. Share your thoughts in the comments below.
Other related posts:
NZ Tech Podcast 321: $3000+ Free Gadgets, One Million Podcast Downloads, US Homeland Security vs Travellers, Banks vs Apple
NZ Tech Podcast 314: Meet Quickflix new Hollywood owner, a temptation to share Ransomware, Homes.co.nz update
NZ Tech Podcast 313: Amazon Go, John Key’s legacy, Goodnest, Media Design School, Network 4 Learning, Uber Eats NZ
Comment by Skip Parker, on 5-May-2011 10:57
I think we can safely say that cheap/free mobiles and smartphones on long term plans will become more expensive as telco's fight for lost revenues.
Comment by ajw, on 5-May-2011 12:20
I do wonder if the Commerce Commission will step in and eventually regulate off/on net price discrimination. I note Vfone has the Auckland market sewn up with steep on net discounts so customers carry two phones.
Why don't 2 degrees get on the on- net bandwagon and offer some heavily discounted pricing. As Telecom and Vodafone are still going to heavily discount their on net pricing.
Comment by Mushdaba, on 6-May-2011 10:01
2degrees already do on-net pricing. You pay less for texts and calls to 2degrees numbers from your 2degrees mobile. This is also contrary to their original advertising that complained about on-net pricing.
Comment by ajw, on 6-May-2011 16:46
Two degrees only have On net discounts for 30 days after prepay top up and then reverts to normal retail rates.
Comment by Mushdaba, on 7-May-2011 11:37
What's your point? It's still on-net pricing is it not?
Comment by NonprayingMantis, on 10-May-2011 10:38
correct, but the vast majority of prepay people topup at least that often, so the price is effectively different all, or nearly all, of the time.
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