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IP/07/1333

Brussels, 14 September 2007

Telecoms: Commission supports French regulator's call for common approach to lower mobile rates

In a procedure under the EU Telecom Rules regarding mobile termination rates in France, the Commission today welcomed the proposal of the French regulator, ARCEP (Autorité de Régulation des Communications Electroniques et des Postes), to further lower the wholesale rates charged by French mobile operators. For the Commission, ARCEP's decision represents a clear move towards rates reflecting real costs. In its letter sent today, the Commission also supports ARCEP's call for a common European approach for calculating cost-oriented mobile termination rates as soon as possible.

The French regulator's proposal to lower mobile termination rates, as foreseen by our EU Telecom rules, is good news for consumers," said Viviane Reding, the EU's Telecoms Commissioner. "I congratulate ARCEP for making this move, which at the same time raises important questions of a European dimension. Should mobile termination rates in the EU be reduced further and eventually converge with fixed termination rates? What is the right balance between consumer benefits and the need to invest in mobile networks? And, finally and most importantly, what should be done to ensure that competition in the single market is not distorted between EU Member States, with operators in some Member States having to pay substantially higher mobile termination rates than in others? Let's not forget that the mobile industry is becoming truly pan-European, with operators often active in several EU countries. National regulators' decisions are therefore crucial and may significantly influence competitiveness, for better or worse. I thus welcome the call by the French regulator for a common approach among Europe's telecom regulators, and for a consistent way to calculate appropriate mobile termination rates. The Commission is ready to guarantee such a harmonised approach across the EU, and will work closely with the European Regulators Group to achieve this as soon as possible."

On 24 July 2007, ARCEP notified the Commission of call termination measures on individual mobile networks in mainland France and the French overseas territories.

Mobile termination rates are the wholesale rates charged for connecting calls between mobile networks. They are currently regulated in all EU countries by the national telecom regulator. On average they amount to 11.4 eurocents per minute in the EU25, starting from 2.25 eurocents per minute in Cyprus and rising to 16.49 eurocents in Poland.

In France, mobile termination rates are already below those in other large EU Member States (see IP/07/1203). ARCEP's draft measure further lowers the current rate and is therefore welcomed as it is a clear move towards a level reflecting real costs. Cost orientation is a core principle of the EU telecom rules.

For operators in mainland France, ARCEP proposes to impose a price cap of €0.065 for Orange and SFR, and of €0.085 for Bouygues between 1 January 2008 and 30 June 2009. Further reductions are also proposed in the overseas territories, where the termination rates are still higher compared to mainland rates.

Nevertheless, ARCEP acknowledges in its notification that the maximum rates set by the current measure for mobile operators in mainland France are still above the cost of efficient service provision. To reach the required cost-oriented level, ARCEP underlines the need to harmonise mobile termination rates and the underlying cost accounting principles at European level. According to ARCEP, the harmonised approach is also necessary for phasing out asymmetries in termination rates currently applied between the two larger operators and Bouygues.

ARCEP stresses that the harmonisation should be driven by the European Commission and national regulators, within the framework of the European Regulators Group (ERG).

Commenting on the transitional asymmetry of the mobile termination rates between Orange and SFR on the one hand, and Bouygues on the other, as foreseen by ARCEP, Commissioner Reding said: "Asymmetric mobile termination rates can be temporarily an effective instrument to promote competition and encourage investments by new market entrants provided that there are objective cost-differences which are outside their control." She also suggested that such asymmetries need to follow a consistent methodology throughout the EU, should be regularly reviewed, and be ultimately phased out.

Background:

In 2004 ARCEP first notified – under Article 7 of the Framework Directive of the EU Telecom Rules – the wholesale markets for voice call termination on individual mobile networks in mainland France and French overseas territories.

The current second round notification, which the Commission received on 24 July 2007, contains two main modifications regarding the earlier notifications.

• Firstly, ARCEP proposes to update the list of mobile network operators active in overseas territories. In this measure ARCEP designates all mobile network operators as having significant market power in terminating calls in their respective networks (Bouygues, Orange and SFR in mainland France and eight mobile network operators in overseas territories).

• Secondly, ARCEP intends to reduce mobile termination rates by modifying the price control obligations.

The Commission considers, in its letter sent to ARCEP today, 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. The Commission recognises that, in certain 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 invites ARCEP to revisit its analysis and price control obligation as soon as common European principles have been established to determine further reductions in mobile termination rates.

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
See also
MEMO/07/255

Annex:

EU Mobile Termination Rates 2006 (in eurocents)

Cyprus
2.25
Germany
11.38
Sweden
6.93
Malta
11.48
Finland
7.96
Spain
11.95
Latvia
9.09
Italy
12.17
UK
9.16
Greece
12.42
France
9.81
Luxembourg
12.97
Austria
10.10
Ireland
13.53
Lithuania
10.43
Belgium
15.53
Hungary
10.55
Slovenia
16.00
Czech Republic
10.57
Estonia
16.40
Slovakia
10.77
Poland
16.49
Portugal
11.00
Bulgaria
n/a
Denmark
11.36
Romania
n/a
The Netherlands
11.37


EU Average
11.40


[ Figures and graphics available in PDF and WORD PROCESSED ]

Source: 12th Commission Report "European Electronic Communications Regulation and Markets, March 2007


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