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2degrees is calling it a step towards "true competition", but Vodafone has blasted the Commerce Commission for their recommendation to regulate mobile phone termination rates.
Telecommunications companies were quick to respond to today's announcement from the Commission that they are advising Communications Minister Steven Joyce to not accept voluntary undertakings from Telecom and Vodafone and instead to impose regulation on termination rates.
These rates are the wholesale charges mobile phone companies charge each other for terminating calls or texts from other networks.
Today's move confirmed the commission's preliminary view in a draft reconsideration report issued last month.
"Welcome news" for 2degrees
2degrees, the main new entrant, has warmly welcomed the regulation news and says it hopes the government will move quickly to accept the recommendation regardless of how Vodafone may react.
Chief operating officer Bill McCabe says regulation is a positive prelude to real improvements in mobile call rates.
He says they're hoping for a quick decision so they can drop their prices
"We won't see change until this decision is accepted by the minister and the price-setting process is concluded. That leaves plenty of opportunity for Vodafone to stall the process, so we're hoping for a quick decision and a fast process that allows 2degrees to put even better prices in the market," says McCabe.
The company says 13,000 New Zealanders signed up to their "Drop The Rate Mate" protest campaign which highlighted the issue.
Vodafone "disappointed"
Vodafone say they are disappointed the Commission is continuing to ignore offers from the industry and that regulation is unnecessary.
"2degrees is not having any trouble competing, so the Commission's efforts to protect it, whilst theoretically elegant are completely unnecessary from a practical point of view," says Paul Brislen, Vodafone's head of corporate communications.
Brislen says their voluntary undertakings will create lower termination rates much sooner than a regulatory process, with price cuts planned for October rather than at the end of another period of government discussion by the Minister.
The company argues that the difference between their offered undertakings and eventual regulation will only be a few cents per minute and they will continue to push their plans with Joyce.
However it was Vodafone's action in launching a contentious Talk plan, which promoted "six cent a minute calls", in April that led Joyce to ask the Commission to reconsider their original February recommendation to accept the industry undertakings.
The Commission said it felt Vodafone's new plan made it more difficult for new entrants in the mobile phone market.
Telecom supports Vodafone's stance, saying they are disappointed also and that regulation is unnecessary.
Joyce says he is inviting written submissions on the commission's recommendation, with submissions due by June 29 and cross submissions by July 6.
