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IP/02/301

Brussels, 22 February 2002

Commission welcomes falling telephone prices

The European Commission today welcomed falling prices in the cost of calls made between telephone networks in the Community, and adopted - at the initiative of Erkki Liikanen, European Commission responsible for Enterprise and Information Society - a Recommendation that phases out benchmarks for interconnection charges between network operators. Welcoming the adoption of the measure, Information Society Commissioner Erkki Liikanen stated, "Interconnection charges for call termination on fixed telecommunications networks have reduced considerably in the EU since the Commission issued its first benchmark prices in 1998. The Recommendation was updated in 1999 and 2000, and as a result, prices for call termination prices to fixed networks in the EU are amongst the most competitive in the world(1). In the light of falling prices, the Commission has decided that it is no longer necessary to update the 'best current practice' prices for call termination to fixed networks. These benchmark prices served to stimulate competition when the market was first liberalised in 1998, but now it is for the national regulatory authorities in the Member States to enforce the rules."

The recommendation, on Interconnection charges for call termination, deals with the fees that one operator charges another to deliver calls on its network, which in turn is reflected in the prices that consumers pay for telephone calls to customers on other fixed networks.

The current regulatory framework for telecommunications, established in 1998, requires fixed network operators with significant market power (typically the incumbent operator) to ensure that charges for terminating calls on their networks are cost oriented. The original Commission Recommendation 98/195/EC of 8 January 1998(2) on Interconnection in a liberalised telecommunications market (Part 1 - Interconnection pricing) provided 'best current practice' interconnection charges for 1998, and was subsequently amended by Recommendations 98/511/EC of 29 July 1998(3) and 2000/263/EC of 20 March 2000(4) to provide best current practice interconnection charges for 1999 and 2000 respectively.

The 'best current practice' interconnections charges provided guidance to the national regulatory authorities (NRAs) until appropriate cost accounting information was made available by operators to allow the NRA to properly check that interconnection charges were indeed cost oriented (as is required under Article 7 of the Interconnection Directive 97/33/EC(5)).

The Commission's 7th Report on the implementation of the telecommunications regulatory package(6), published in November 2001, notes the progressive reduction of interconnection charges in the Community to levels comparable to the Commission's best practice price recommendations(7), and the increasingly availability of cost accounting systems by operators with obligations to interconnect. As a result, from year 2002 onwards, it is considered no longer necessary to rely on the 'best current practice' approach. However, other elements of the Recommendation, in particular the use of a long-run average incremental cost methodology to assess efficient costs, are retained.

The 'best current practice' prices for call termination on fixed networks do not apply to interconnection to mobile networks which, under the current regulatory framework, is subject to different rules.

ANNEX

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    In Luxembourg there is no distinction between local and long-distance domestic calls.

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    D and D(2) refer respectively to Regio50 and Regio200 Zone rates. However, single transit interconnection is also established in the City Zone area, especially in large cities.

    (1)According to the 7th Implementation Report on the implementation of the telecommunications regulatory package (COM(2001)706 final) interconnection charges for call termination on fixed network has a EU cost average of 0.85 Euro-cent/minute at local level, of 1.23 Euro-cent/minute at single transit level and of 1.86 Euro-cent/minute at double-transit level (peak time).

    (2)OJ L 73, 12.3.1998, p.42.

    (3) OJ L 228, 15.8.1998, p.30.

    (4) OJ L 83, 4.4.2000, p.30.

    (5) OJ L 199, 26.7.197, p.32.

    (6) 7th Implementation Report (COM(2001)706 of 26.11.2001)

    (7) The last best practice price range recommendations published by the Commission for call termination interconnection to fixed networks are (at peak time, exclusive of VAT):- Local interconnection: 0.5 0.9 Euro-cent per minute- Single transit: 0.8 1.5 Euro-cent per minute- Double transit (>200 km): 1.5 1.8 Euro-cent per minute


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