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 approx 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.

SMS text message prices will be cut at a wholesale level from 9.5c to 0.06c – effectively immediately. This drop to nearly free is likely to lead to further reductions in retail rates, particularly for ‘text bundles’ (pre-purchase of large quantities of text messages).

The determination is expected to have a dramatic impact on the NZ mobile industry in two key 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)
  • Competition: The reduced wholesale rates will create a more level playing field and makes it easier for new and recent entrants into the mobile market to gain significant market share (such as 2degrees Mobile)

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.