telecommunications, posted: 19-Jun-2006 18:44
Vodafone's plans to provide a converged phone service with free local calls has passed the first hurdle as the Commerce Commission released a draft determination today. In the decision, the Commission says:
The Commission’s preliminary conclusion is that Telecom and Vodafone should exchange local calls at a reciprocal price of zero in accordance with the "pure bill and keep" pricing method.
Provided the draft determination stands through to the final step in July and Telecom does not launch a legal challenge against it, Vodafone could set up a phone service this year in New Zealand similar to its ZuHause one Germany and Casa in Italy. This provides customers with handsets that have two numbers on them, a local PSTN one, and another one for normal mobile telephony.
When customers are inside a 2 kilometre "homezone" calls will be routed via the cheaper PSTN interconnection. Outside the zone, calls will go through the GSM network as normal and be charged accordingly.
Vodafone has tried to reach a commercial agreement with Telecom on local calling interconnection but had to apply to the Commerce Commission after fruitless negotiations. Telecom argues that for local calls to be defined as such (and to be free within local calling areas as set out under the Kiwishare), Vodafone has to operate a fixed PSTN. However, the Commission disagrees and says Vodafone is not required to do so. Beyond the link to a local number it isn't necessary to define the the features of a local call, the Commission says. Nor is it necessary for the Commission to consider what happens to a local call from a Telecom customer to a Vodafone local number after it has been handed over to Vodafone.
Furthermore, the Commission says that Telecom may not charge its customers higher price for local calls made to Vodafone local numbers. Telecom can only charge the same price its customers pays to call one another.
Vodafone currently has just over half of the mobile market in New Zealand, but only twenty per cent of the total telecommunications business in the country. Today's determination could see the global mobile telephony giant take a big chunk of Telecom's local calling revenues, an area that has hitherto been safe from competition.
A further threat to Telecom's revenues comes from Vodafone's ability shortly to provide HSDPA broadband at 1.8Mbit/s downloads and 384kbit/s uploads together with the converged phone service. Overseas, Vodafone is going ahead with DSL resale, something that will be a possibility in New Zealand soon, thanks to new regulation that provides an enhanced Regulated Unbundled Bitstream Service (RUBS) that features so-called Naked DSL which access seekers can buy without having to purchase the voice component on top.
Telecom has been trialling a semi-converged IP based voice service but intends to release it early next year only. Vodafone's success with the Commission could pull the rug from underneath the incumbent's plans, but it remains to see how quickly the British mobile operator can move in this area.
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