Standard Terms Determination for the Designated Services of the Mobile Termination Access Services (MTAS) Fixed-To-Mobile Voice
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PUBLIC VERSION 1185561_1.DOCX Standard Terms Determination for the designated services of the mobile termination access services (MTAS) fixed-to-mobile voice (FTM), mobile-to-mobile voice (MTM) and short messaging services (SMS)) Decision 724 Determination under section 30M of the Telecommunications Act 2001 The Commission: Dr. Ross Patterson Anita Mazzoleni Gowan Pickering Date of Determination: 5 May 2011 CONFIDENTIAL MATERIAL IN THIS DETERMINATION IS CONTAINED IN SQUARE BRACKETS ISBN 978-1-869451-48-6 Contents TABLE OF CONTENTS EXECUTIVE SUMMARY ......................................................................... I Introduction ............................................................................................... i Pricing principle ....................................................................................... ii Price for the voice MTAS services ......................................................... ii Price for the SMS service ....................................................................... iii Conditions ................................................................................................ iv Service description ................................................................................... v Sundry charges and non-price Terms ................................................... v Implementation ........................................................................................ v SECTION A. CONTENTS OF THIS MTAS STD DECISION DOCUMENT ........................................................................................... 1 Purpose ...................................................................................................... 1 The MTAS Services STD ........................................................................ 1 Contents of this STD decision document ............................................... 1 SECTION B. FRAMEWORK FOR THE MTAS STD ....................... 4 Purpose ...................................................................................................... 4 Legislative framework ............................................................................. 4 Assessment framework ............................................................................ 9 New Zealand market conditions ........................................................... 11 SECTION C. FRAMEWORK FOR SELECTING A PRICING PRINCIPLE ......................................................................................... 32 Purpose .................................................................................................... 32 The Initial Pricing Principle ................................................................. 32 General approach to determining which of the pricing principle options in the IPP should be applied to the MTAS services .............. 32 Circumstances where BAK may best give effect to section 18 of the Act ............................................................................................................ 45 Conclusion .............................................................................................. 46 Contents SECTION D. DETERMINING THE PRICING PRINCIPLE, AND CORE PRICES, FOR THE VOICE MTAS SERVICES ...................... 48 Purpose .................................................................................................... 48 Benchmarking the forward-looking costs of the MTAS for voice .... 48 Selecting a price point for the voice MTAS services .......................... 72 Identifying a cost-path for the voice MTAS services ......................... 81 Overall results of TSLRIC benchmarking for the voice MTAS services .................................................................................................... 83 Assessment of whether a forward-looking cost-based methodology or BAK best gives effect to the purpose set out in section 18 of the Act 84 Assessment of whether asymmetric MTRs are required to address existing barriers to competition ............................................................ 89 Conclusion on the pricing principle and core prices for the voice MTAS services ........................................................................................ 96 SECTION E. DETERMINING THE PRICING PRINCIPLE, AND CORE PRICES, FOR THE SMS TERMINATION SERVICE ........... 97 Introduction ............................................................................................ 97 Establishing a benchmark set for SMS ................................................ 97 Price point selection for the SMS termination service ....................... 99 Assessment of whether a forward-looking cost-based methodology or BAK best gives effect to the purpose set out in section 18 of the Act ................................................................................................................ 100 Identifying a cost-path for the SMS termination service ................. 108 Conclusion on the pricing principle and core prices for the SMS termination service .............................................................................. 108 SECTION F. CONDITIONS .............................................................. 109 Purpose .................................................................................................. 109 Conditions applicable to on-net off-net price differentiation .......... 109 Contents Overview of the competitive benefits and detriments of on-net off-net price differentiation ............................................................................. 112 Does evidence from the NZ market suggest that on-net off-net price differentials have created a barrier to competition? ........................ 116 Is a condition limiting on-net off-net price differentiation appropriate? ......................................................................................... 118 Options for implementing a condition limiting on-net off-net price differentiation ....................................................................................... 121 SECTION G. GLIDE PATH .............................................................. 125 Purpose .................................................................................................. 125 Commission's preliminary view on whether a glide path was appropriate ........................................................................................... 125 Views of submitters .............................................................................. 125 Benefits of providing a glide path ...................................................... 127 Detriments of providing a glide path ................................................. 128 Assessment of whether a glide path is appropriate .......................... 128 SECTION H. OTHER ISSUES, INCLUDING SERVICE DESCRIPTIONS, SUNDRY CHARGES AND NON-PRICE TERMS .. ....................................................................................... 132 Purpose .................................................................................................. 132 Service Description .............................................................................. 132 Sundry Charges – Set-up costs ........................................................... 134 Artificial inflation of traffic ................................................................ 135 SIM Boxes ............................................................................................. 136 Hand over / Points of Interconnection ............................................... 137 Security requirements ......................................................................... 137 Due Date ................................................................................................ 137 Liability caps ........................................................................................ 138 Billing disputes ..................................................................................... 138 Contents Termination and suspension ............................................................... 139 Changes to operational procedures and technical specifications .... 139 Disclosure of information .................................................................... 140 Post implementation review ................................................................ 140 Terms that may be varied ................................................................... 140 SECTION I. IMPLEMENTATION PLAN ..................................... 142 Purpose .................................................................................................. 142 Changes to timeframes proposed in the draft MTAS STD Implementation Plan ........................................................................... 142 ATTACHMENTS TO THIS STANDARD TERMS DETERMINATION ................................................................................ 145 APPENDIX 1: COMMISSION BENCHMARKING INFORMATION ....................................................................................... 146 Calculation of benchmarked cost paths ............................................. 148 Corrections to the benchmark set ...................................................... 150 Information on the specific cost estimates used for each benchmarked jurisdiction. .................................................................. 151 APPENDIX 2: PROCESS FOR THE MTAS STD ............................ 162 Background to the determination process ........................................