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Mobile Termination: Is The Best Rate Zero?

This week the ACCC launched an inquiry into the wholesale pricing for mobile termination, releasing a discussion paper and inviting industry submissions. Should prices be lower? How should they be calculated?

Economist John DeRidder suggests it is important to follow a cost-based approach, but perhaps switching from the traditional bottom-up TSLRIC+ approach to a top-down building block approach favoured in other utilities. He is against the European pure-incremental value approach, which attributes only the specific costs required to offer a wholesale termination service.

Joshua Gans, Professor of Innovation and Entrepreneurship at the University of Toronto, prefers the European way. He was involved in the ACCC’s early work on establishing a realistic declared price, but these days he thinks the only sensible price is zero, particularly as calls migrate to LTE, where it will be difficult to differentiate from other data.

We also pick up on last week’s program on data retention, where we suggested greater definition was required on exactly what was included in the term metadata. It’s clear from interviews with the Attorney General this week that’s he’s not sure either.

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