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EU Telecom rules: Commission strives to lower mobile termination tariffs in Italy

European Commission - IP/07/1203   02/08/2007

Other available languages: FR DE IT

IP/07/1203

Brussels, 2 August 2007

EU Telecom rules: Commission strives to lower mobile termination tariffs in Italy

The Commission has today asked the Italian regulatory authority AGCOM (Autorità per le Garanzie nelle Comunicazioni) to further reduce its proposed cap on mobile termination rates for H3G Italy. It also requested AGCOM to finalise the second round of its market analysis so cost-oriented mobile termination rates for all four Italian mobile network operators can be introduced as soon as possible.

For consumers to benefit it is imperative that mobile termination rates are cost oriented and operators have incentives to become more efficient," said Viviane Reding, EU Telecoms Commissioner. "The Commission is keen to guarantee a harmonised approach for mobile termination rates across the EU and to support the European Regulators Group, if necessary, so that effective competition is ensured and that the mobile market remains vibrant."

On 2 July 2007, AGCOM notified the Commission of measures that would cap the mobile termination rates of the 3G-operator, H3G Italy.

AGCOM proposed to impose on H3G Italy a maximum termination price based on a "delayed approach", taking into consideration international benchmarks, the economic and financial situation of H3G, trends in mobile termination rates in Italy, and changes in the market during 2004–2006, particularly concerning third-generation mobile telephony. This maximum price will be introduced from 1 January 2008 and be valid until it is replaced by measures imposed by AGCOM after the results of further market analysis, due mid 2008.

Although AGCOM's use of the "delayed approach" in the notified draft measure is acceptable in principle, the Commission was concerned that the mobile termination rates that will be imposed on H3G on 1 January 2008 (€0.1625) are among the highest in Europe (in EU Member States H3G's rates currently vary between €0.08 and €0.1625, and they are foreseen to be further reduced in 2008). Therefore the Commission asked AGCOM to consider applying more rigorously its proposed model to further reduce H3G's mobile termination rates from 1 January 2008.

Background:

AGCOM reviewed the market for voice call termination on individual mobile networks at the end of 2005 and found that all Italian operators (TIM, Vodafone, Wind and H3G) had significant market power in this market. Mobile termination is a wholesale service bought by telephone operators allowing users to call a mobile customer on another network. AGCOM thus imposed regulatory remedies on the four operators, including a price control obligation for TIM, Vodafone and WIND and not on H3G.

The Commission considers that termination rates should be based on the costs of an efficient operator - in the Commission's view the optimal method for setting price caps for mobile termination rates - and should normally be symmetric. The Commission recognises that, in certain exceptional cases, an asymmetry might be justified by objective cost differences which are outside the control of the operators concerned. The use of specific frequency bands, or substantial differences in the date of market entry which could justify higher termination rates during a reasonable transition period could lead to these differences. The Commission invited AGCOM to closely cooperate with the European Regulators Group so as to develop a coherent EU cost model.

For more information:

All notifications and Commission responses can be found at:
http://circa.europa.eu/Public/irc/infso/ecctf/library

For more on the Article 7-procedure between the European Commission and national regulators, see:
http://ec.europa.eu/information_society/policy/ecomm/doc/article_7/052_art7.pdf
A detailed overview of the state of infringement proceedings is available on the DG Information Society and Media’s implementation and enforcement website:

http://ec.europa.eu/information_society/policy/ecomm/implementation_enforcement/
See also

MEMO/07/255


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