On the surface, Vodafone's new $12 plans seem like a huge mistake. The telco has has incurred the wrath of competition regulators, forcing them to reconsider mobile termination rate regulation. But was Vodafone's move a mistake?
The Commerce Commission had voted 2-1 against regulating the rates. But then came Vodafone's Talk Add-on product, which costs only 6 cents a minute to landlines and other Vodafone numbers, but charges users 89 cents a minute to ring other networks.
No wonder the competition squealed. And the Commerce Commission decided to have another think on controlling the rates.
With the regulators now demanding regulation, it looks most unlikely Minister Steven Joyce will turn down such recommendations when he makes his decision shortly. This could well be the biggest blunder Vodafone has ever made in New Zealand...
...unless it sees its 'folly' as hurting Telecom more. While analysts say regulated termination rates will cost Vodafone $8 million per month in revenues, the regulation changes will cost Telecom New Zealand around $30 million in earnings before interest, tax, depreciation and amortisation for 2012.
Maybe it is not a case of a simple Vodafone cock-up, but rather a strategic move in a longer game of chess!