Brussels, 07/05/2009 (Agence Europe) - Given the lack of competition on the market and the significant disparities between member states, the European Commission has decided to take action on calculating termination rates. These rates involve the wholesale fees charged by operators to connect the call from another operator's network which are part of everyone's phone bill. Viviane Reding, EU Telecoms Commissioner and her counterpart Neelie Kroes, responsible for competition announced on Thursday 7 May, the adoption of a recommendation on the issue, which is intended to provide clear guidelines for the EU National Regulatory Authorities (NRA), which are requested to pay particular attention to it. Ms Reding declared: "The Commission decided to intervene today against these distortions of competition in the Single Market, which deter investment into upgrading fixed networks to fibre and for which in the end consumers are paying the price." Ms Kroes added: “Only a rigorous and harmonised approach to regulation will ensure that the existing distortions of competition are removed in the whole EU and that innovative new products combining fixed and mobile calls will emerge”. All EU national regulators should apply the recommended approach to termination rates by the end of 2012. However, national regulators with limited resources may use different approaches for a limited further period as long as they achieve the same pro-competitive result. The Recommendation indicates specifically that termination rates at national level should be based only on the real costs that an efficient operator incurs to establish the connection. Although there has been a high level of tolerance with regard to termination rates, during the development of mobile networks in Europe, these high prices can no longer be justified today given the level of network development completion, explained Commissioner Reding.
To realise the full potential of a single telecoms market, the Commission's Recommendation sets out cost factors that all EU national telecoms regulators should take account of when setting termination rates which are not market prices, but regulated by national regulators. This will make termination rates converge to a considerably lower level than today (to approximately 1.5 euro cents to 3 euro cents per minute by the end of 2012, as opposed to around 8.55 cents applied to today). Termination rates should be based “on the costs of an efficient operator” and should apply to all operators at the same level. Exceptions are allowed in certain conditions, for a limited period of time, for cost differences outside an operator's control. Exceptions are possible in certain conditions, for a limited period and for cost differences that escape the operators' control. If the EU national regulatory authorities implement the measures efficiently, the significant disparities between member states (the highest charges are in Sweden, Finland, France, Austria, Italy and Romania). The Commission has identified inconsistencies across Europe in an assessment of about 120 regulatory proposals from national telecoms regulators relating to termination rates over the past 6 years. Mobile termination rates (on average of 8.55 euro cents per minute) are also around 10 times higher than fixed-line termination rates (that range on average from 0.57 to1.13 euro cents per minute). They are an indirect subsidy that benefits mobile operators with a large market share to the detriment of smaller and fixed-line operators. They also direct funds away from critical investments like upgrades to high-speed internet networks, and hinder innovative services. During the four-year period from 2009-2012, as regulators align with the more consistent approach outlined in the Recommendation, smaller mobile operators (who are net senders of call traffic to other networks) can expect to pay less to their larger competitors, fixed operators could get at least €2 billion of additional revenue by paying lower, cost-based termination rates for fixed to mobile calls and consumers are expected to save at least €2 billion. The Commission hopes that the longer-term impact will be even bigger as operators generate new revenues, as new operators have the incentive to enter the market and grow and as consumers benefit from lower prices and greater service innovation. All EU national regulators should apply the recommended approach to termination rates by the end of 2012. (I.L./trans/rh)