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Regulating termination rates introduced ten years ago kick-started mobile market competition in New Zealand. Now it’s time to review the rules. Don’t expect to see much change.

To no-one’s surprise the Commerce Commission’s draft review of mobile termination rates recommends they stay regulated.

A termination rate is the price one phone company charges another when a call from one network is made to a customer on another network. Mobile termination rates affect calls between the Spark, Vodafone and 2degrees networks.

Until a decade ago mobile termination rates were unregulated. Carriers could charge what they liked. And they did. New Zealand termination rates were high.

This stifled competition and meant mobile calls were expensive by international standards. That in turn meant people here didn’t use their phones as much as people overseas.

Calls between networks

Before regulation Telecom NZ, now Spark, and Vodafone, would charge customers less to call others on the same network than the cost of calling another network.

In the jargon of the time they offered have different prices for on-net and off-net calls.

Mobile termination rates mean customers on the least popular network end up, over time, paying more to use their phones.

This acted to stop people choosing 2degrees, in part because potential customers feared friends might call less often.

In 2010 the government stepped in. Termination rates have been regulated since then.

The move triggered a dramatic drop in call prices to the point where New Zealand moved from being an expensive place to use a mobile phone to a relatively cheap place.

Flat playing field

Most of all, the regulation flattened the playing field. This meant the third mobile network, 2degrees, could grow beyond being a niche player.

In turn this further boosted competition and paved the way for cheaper calls more innovative price deals.

Today we have a vibrant, competitive and innovative mobile market.

Mobile termination rate regulation almost didn’t happen. Ten years ago Telecom NZ and Vodafone negotiated a voluntary agreement with government to lower charges. The Commerce Commissioned agreed.

It was all set to go. Then Vodafone began selling the most aggressive on-net plan ever seen in New Zealand. The Commerce Commission reversed its earlier decision.

The case against mobile termination rates

Fast forward to today. The Commerce Commission now says there may be a case for dropping regulation of termination rates for SMS text messages. That’s because of the popularity of alternative over the top services like WhatsApp.

This external pressure has reduced txt prices to the point where many plans offer customers unlimited texting at no extra cost. High charges are unlikely to return.

The Commerce Commission says voice call termination rates should remain regulated because there are few competitive alternatives.

That’s true on one level, but it’s not straightforward because today’s mobile battleground is all about data. With lots of data, customers can make voice calls using free or cheap over the top services.

And anyway, voice calls are not as popular as they were ten years ago.

If, in a world without regulated mobile termination rates, a carrier attempted to charge higher voice call rates, the move to data calls would accelerate. The trend away from voice calls would speed up. So, it’s possible we no longer need to regulate.

On the other hand economist Donal Curtin thinks the regulation needs another look.

The Commerce Commission now wants feedback on its MTAS draft review findings.

Apple iPhone SE 2020 with charging pad

Sometimes the stars align. Apple set out its hardware stall in early 2020 with advanced, yet lower priced, iPhones, iPads and Macs. The the pandemic hit.

Affordable models arrived as the world tightened its belt to deal with the inevitable downturn.

Take the iPhone SE. It looks like a two-year-old iPhone on the outside. Yet inside the case it has a 2020 processor. The A13 Bionic chip also powers the iPhone 11.

Lockdown ready

April’s story calls it an iPhone that’s right for lockdown times. News reports suggest the SE sell faster than Apple expected. The company struggled to meet demand. Although that could also be down to pandemic supply chain problems.

Last month’s iPhone SE review says: “This may not be the most exciting iPhone from a technology point of view. Yet it is the iPhone a lot of people have been waiting for.”

You can’t argue a NZ$800 phone is cheap. Many readers will wince if we describe it as affordable.

Yet it puts advanced technology and, arguably, the best experience in reach of more buyers.

The iPhone SE stacks up well against similar price competitors. If Android is not your thing and you prefer to avoid second hand hardware, its $800 price tag is tempting.

iPad

This year’s base iPad model costs NZ$600. You get a lot of iPad, but not enough storage. Its 32GB is not enough for most uses. Pay $780 and you’ll get a 128GB model. It represents good value for money.

Move up to the iPad Pro and prices start at NZ$1500 for an 11-inch model. That’s in line with prices two years ago but you get more iPad. The base Pro now comes with 128GB at the price of the two year old 64GB model.

Although currency movements haven’t been kind to New Zealand, prices for new MacBook Airs are still $100 or so lower than the models they replace. They come with better keyboards. Apple kept MacBook Pro prices in line with earlier models, but bumped the storage. Likewise the Mac mini.

Apple remains at the more expensive end of the market when benchmarked against similar hardware from other laptop makers. Yet the gap has narrowed. If you like the performance, the operating system and the wider Apple experience that margin is less of a barrier than it was.

Apple still has nosebleed prices if you know where to look. You could fork out NZ$10,800 for the basic Tower version of the Mac Pro. A full configured model can cost more than NZ$94,000. That includes NZ$700 to put wheels on the beast.

That’s not likely to be on your shopping list. A nice iPad keyboard might be. Apple wants NZ$549 for the iPad Pro Magic Keyboard. That’s pushing it.

Some incorrect prices were shown in an earlier version of this post. 

Gebbies Valley is the site of the Rural Connectivity Group latest mobile broadband tower.

I had to look the place up on a map before writing this story. That’s kind of the point.

The RCG’s job is to fill broadband and mobile voice coverage gaps. A government subsidy helps. The RCG is a joint venture between New Zealand’s three mobile carriers: Spark, Vodafone and 2degrees.

It runs an open access network. Some of the money funding comes from the Telecommunications Development Levy.  The Provincial Growth Fund also contributes. Spark, Vodafone and 2degrees invested $75 million in the project.

Today there are 100 working rural broadband towers.

Fixed wireless broadband

Each tower offers 4G fixed wireless broadband and 4G voice calling to the local community. To keep costs low, Spark, Vodafone and 2degrees share the antennae. The towers have fibre backhaul, which improves the performance.

Gebbies Valley has Voice-over-LTE equipment which means users can make high quality voice calls. There will also be 3G voice calling, that’s not commissioned yet. This will cover a black spot on State Highway 75.

A media statement from Communications Minister Kris Faafoi says it is a significant milestone for the second phase of the Rural Broadband Initiative. This a government funded project to deliver broadband services to the more remote parts of New Zealand.

Faafoi says the RCG towers now provide broadband access to 8,121 homes and businesses. They also mean extra mobile coverage for 343km of state highway and connect 23 tourism locations.

Eventually RBI2 will cater for 84,000 rural homes and businesses. It will improve mobile coverage on 1400km of state highways and connect 168 tourist sites.

While the project is planned to officially finish in 2023, there’s a somewhat open-ended nature to RBI2.

Early on in the programme, the government asked the RCG to build as many towers as possible with the allocated pool of money. Since then more funds have been tipped in and there’s no reason to think it will all stop at the formal end of the project.

At this week’s NZ Tech Podcast host Paul Spain threw me a hospital pass: Is it time to stop hating Microsoft?

Younger readers may not remember, but at one time Microsoft was unpopular in many circles. Yes, there were even people who hated the company.

There were reasons for this. Pedants might argue Microsoft Windows was not a monopoly. Yet its 95 percent plus share of desktop operating systems sure felt like one.

Abusive monopoly

In effect Microsoft called all the shots. At times it abused its monopoly. It wasn’t always ethical1.

There are too many examples to mention. People have written books and doctrinal theses on the subject.

Microsoft attempted to parlay its desktop OS monopoly into other areas.

At one point it set out to win the desktop applications software market. Microsoft Word and Excel were up and coming challengers at the time.

The Lotus position

There are reports an internal message went to developers: “Dos ain’t done until Lotus won’t run”. In other words, bosses told them to build the operating system so a rival spreadsheet was useless.

That story may be a myth. Yet it explains why there was so much ill-will towards Microsoft. The accusations didn’t have to be true. They only had to feel true.

There are actual examples of bad behaviour. Some ended up in court.

The Internet Explorer antitrust action was a low point.

In those days critics suspected Microsoft’s motives even when it did good things.

In 1997 Apple was struggling and needed cash in a hurry. Microsoft came to the rescue. It agreed it would support a Mac version of Office for five years. It is still going today. Apple agreed to drop a law suit over Microsoft copying Apple’s OS look and feel.

Microsoft personalities

Microsoft’s key personalities did not help. Bill Gates’ rubbed people up the wrong way. Steve Ballmer took that to new levels.

Ballmer left Microsoft in 2014. While he was boss the company’s share price stagnated. So did its technology. And the company’s hardball attitude. Often Ballmer would sink innovative projects to protect the Windows and Office monopoly.

Some of that was baffling. Like the excellent iOS versions of Office apps which was held back from the market.

Nadella takes over

Early in 2014 Satya Nadella took over the reins. He moved the company into cloud computing. More to the point, Nadella stopped the aggressive defence posturing.

Today’s Microsoft is a different beast. It is still big, some of the time it is the world’s largest company by market capitalisation. It can still upset people. Every large corporation has its critics.

No doubt there will be those who continue to hate Microsoft. You don’t get to be number one without creating a few waves. Yet there is less to hate, less to object to.

Even, gasp, Microsoft Open Source

Today Microsoft has embraced open source. It is possibly the world’s largest provider of open source products. By some measures the company’s Azure cloud services uses more open source than proprietary software.

Windows is no longer a monopoly. It still runs on more computers than any other OS. But it now has to compete with ChromeOS, MacOS, iOS and Android. It doesn’t dominate.

Likewise while Office remains popular, it is not the only game in town.

You don’t have to love Microsoft. Actually that would be weird. There are still plenty of things to criticise. But if you carry a grudge from 20 years or so ago against a company that is now different in many ways, that seems like a waste of energy. Go and do something creative with it instead.


  1. What’s the point of building a monopoly if you don’t abuse it? ↩︎

I’m back on the NZ Tech Podcast.

Bill Bennett and Paul Spain discuss – Slack+Amazon vs Microsoft Teams, Amazon UK free football, UK alliance to compete with Huawei 5G, iPhone sink or swim, Crown Infrastructure update, Vodafone & CoreView, Brave missteps, Time to stop hating on Microsoft? Hosted by Paul Spain and this week’s guest: Bill Bennett. Listen to the Podcast here:       […]

Source: Slack+Amazon vs Teams, iPhone beached for >14-months, UK vs Huawei, Time to stop hating on Microsoft? – NZ Tech Podcast