Nicta prioritises fairer playing field for operators

MINISTER for Information and Communications Technology has made a retail services determination (RSD) affecting retail mobile service prices on the recommendation from the National Information and Communication Technology Authority (Nicta).
RSD is a regulation which can specify retail pricing, service standards or pricing principles relating to the supply of a particular service.
“Nicta has completed a public inquiry into whether mobile originated retail national voice call services that are supplied by Digicel on a prepaid and postpaid basis, should be subject to a retail service determination that limits the level of price discrimination between on-net and off-net calls,” Masiu said.
“By increasing the price difference between off-net and on-net calls beyond what would be reasonable to reflect differences in cost, a large operator like Digicel, discourages customers from subscribing to smaller networks.
“That is because being in a smaller network implies that most calls would be off-net, to Digicel.
“This creates a vicious cycle for smaller networks, where the demand for their services is artificially diminished, which in turn leads to low revenue, growth, low profitability, and low investment on expansion and upgrades.”
Masiu said this lessened competition in the market, increasing market concentration, reducing the incentive for smaller operators to invest on network expansion and increase prices to all consumers compared to a situation where no such unjustified price differential exists.
The proposed determination seeks to address that by limiting the price difference to a maximum equivalent to the voice interconnection charge applies to Mobile and Fixed Access Services.
For example, the RSD will now prevent Digicel from charging customers more than 88 toea per minute for mobile calls made to Vodafone or Bmobile during week days at peak hours (5am-10.59pm).
Assuming that current commercially negotiated interconnection rates (mobile and fixed termination rates) between the mobile operators is 8 toea per minute for this particular call service made at this particular time. The same principle applies to all Digicel off-net calls.
All Digicel off-net call rate must be less than, the sum of its own on-net rates and the interconnection rates that Digicel and other mobile operators commercially agreed on.
Nicta will monitor the compliance with the determination and may recommend variations to the determination if neccessary.
Masiu said the regulatory intervention was necessary to address the anti-competitive effects of Digicel’s large price difference between off-net and on-net calls which would benefit customers.
The retail service determination is the only practicable regulatory option in such circumstances.