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Vodafone Misleading Customers Over Termination Rates

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Fuseworks Media
Fuseworks Media

Vodafone has been distributing misleading information on mobile termination rates (MTRs) through its retail network.

The material, obtained from Vodafone's Queen Street store in Auckland, carries an article written by Vodafone's External Communications Manager, Paul Brislen.

Matthew Hooton, spokesman for the Drop the Rate, Mate! campaign for more competition and lower prices in the mobile phone market, says the article is misleading and wrong.

"Vodafone is clearly desperate to maintain its ridiculous and self-serving argument that high MTRs are somehow a good thing for consumers," Mr Hooton said. "What it really wants to do is continue using high MTRs to keep retail prices high and deter new competitors from the market. In this publication, it seems to be willing to resort to misleading its customers. It's important to get the facts into the public domain."

Vodafone says: The Commerce Commission in its investigation into MTRs isn't going to work out what New Zealand's costs are. It's just going to use a list of nine countries' costs and pick the middle one.

The truth: The Commission has, as part of due process, benchmarked costs in countries where MTRs have been calculated in order to see if New Zealanders were likely to be paying too much. The results showed that we're probably paying more than double what we should be. If the Government decides to regulate MTRs, then contrary to Vodafone's article, the actual cost in New Zealand will be calculated. Vodafone says: MTRs don't have anything to do with retail prices.

The truth: Excessive MTRs keep retail prices high and prevent effective competition. Half the world has zero or very low MTRs and retail prices for calls in those countries are significantly below New Zealand as competition is allowed to flourish. Vodafone says: If there are no MTRs then a whole raft of customers run into trouble.

The truth: This contradicts Vodafone's previous statement that MTRs do not affect retail prices. It is also a veiled threat to customers that Vodafone will increase its prices if MTRs are removed. In reality, in countries where there are low or no MTRs consumers pay very low rates for calls - including Vodafone customers in those countries. Vodafone says: Those people who don't make lots of calls but receive lots are at risk because they stop being profitable and start costing the telco money.

The truth: This is another veiled threat that Vodafone will increase its retail pricing as a result of lower MTRs. This is scaremongering and extremely unlikely to occur. In fact, in all other countries where MTRs have dropped significantly, we see much lower prices and more competition. Vodafone says: New Zealand's retail pricing is better than most other OECD countries.

The truth: More than two-thirds of Kiwis are on prepaid mobile plans, and Vodafone and Telecom's prepaid prices are some of the most expensive in the OECD.

The launch of Drop the Rate, Mate! was sponsored by Airnet, Consumer New Zealand, Federated Farmers, the Federation of Maori Authorities, the New Zealand Union of Students' Associations, the Telecommunications Users Association, 2degrees and the Unite Union.

Since then, the campaign has received support from over 9,500 New Zealanders through its website at

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