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Telecoms: Commission welcomes French regulator's move to introduce competitive mobile termination tariffs

European Commission - IP/08/1810   27/11/2008

Other available languages: FR DE IT SV FI RO

IP/08/1810

Brussels, 27 November 2008

Telecoms: Commission welcomes French regulator's move to introduce competitive mobile termination tariffs

The Commission today, in a letter, welcomed the French regulator's proposal to bring the wholesale rates charged by French mobile operators closer towards the costs of an efficient operator. The proposed decision of ARCEP (Autorité de Régulation des Communications Electroniques et des Postes) is a very important step towards the elimination of price distortions between phone operators in France. The decision will lead to lower consumer prices for mobile calls while facilitating investment and innovation in the entire French telecoms sector. The Commission also invited ARCEP to keep up its efforts to reach truly cost oriented and symmetric mobile termination rates for all operators by setting a target date by which they should equal the costs of an efficient operator in the next regulatory window that starts in 2011.

"I strongly welcome ARCEP's proposal, as I am convinced that truly cost oriented termination rates will be of great benefit to consumers. Not only will it make for more affordable calls to all networks alike, it will also, once all operators in France – mobile or fixed – compete on a level playing field, foster investment and innovation," said EU Telecoms Commissioner Viviane Reding. "At this stage, ARCEP's approach clearly represents best European practice. The French regulator is making very important efforts to bring mobile regulation in line with the forthcoming Commission Recommendation on the regulatory treatment of termination rates."

"ARCEP's approach will boost competition in the French mobile phone market," said EU Competition Commissioner Neelie Kroes. "I am sure that French consumers will benefit from ARCEP's initiative and will in the near future have to pay less for their calls. Mobile phone companies, whether large or small, should finally be in a position to offer calls to all networks at similarly attractive prices. Furthermore, calls from fixed lines to mobile phones can also become much cheaper."

Today, the Commission endorsed the regulatory measures proposed by the French regulator ARCEP: a price control obligation requiring French mobile operators SFR and Orange France to charge a termination rate of €0.03 per minute from 1 July 2010. Bouygues' rate is to be set at €0.04 per minute by the same date. ARCEP`s overall approach is to reduce termination rates towards the long run incremental cost (LRIC) of an efficient operator resulting in symmetric rates which will eventually be in line with the Commission's forthcoming Recommendation on termination rates. ARCEP set the target efficient cost-based mobile termination rate between €0.01 and €0.02 per minute, to be eventually reached by all mobile operators.

ARCEP's proposed price control allows France's three mobile operators a transitional period to arrive at the target mobile termination rates, so that they can adjust their consumer charges. It will also allow ARCEP to refine its method for determining the future symmetric mobile termination rate, on the basis of efficient cost. For the time being, ARCEP allows Bouygues a higher mobile termination rate than its competitors, but the difference has been significantly reduced compared to previous regulated rates. In today's letter to ARCEP, the Commission agrees that Bouygues' late market entry and extra costs inherited from unfavourable frequency allocation in the past should no longer be taken into account when applying truly efficient reference costs. However, it stresses that justifying asymmetric rates because of existing traffic imbalances in favour of the larger mobile operators might not sufficiently take into account that traffic imbalances may in fact be caused by asymmetric termination rates and by individual operators' pricing strategies.

With the EU mobile phone industry increasingly active on a cross-border scale, national regulators' decisions can significantly impact competitiveness across the single market. The Commission's letter therefore invites ARCEP to set symmetric mobile termination rates equal to the cost of an efficient operator in its next regulatory period, starting in 2011.

Background:

Today's Commission letter to ARCEP was sent under the "Article 7 procedure", foreseen in the EU Framework Directive (part of the EU's telecoms rules). This procedure leaves considerable scope to national telecoms regulators on how to achieve effective competition, but requires them to notify draft regulatory measures to the Commission. Where these measures concern market definitions and significant market power analyses, the Commission has the possibility to require the national regulator to withdraw the measure. Where the measures concern regulatory remedies – as in the present case –, the Commission may make comments of which the national telecoms regulator should take utmost account. The measure notified by the French regulator concerns the second round market review of wholesale voice call termination services on individual mobile networks in France.

The Commission has observed a continued pattern of inconsistency in average prices and regulatory approaches across the Member States. These differences cannot solely be explained by different national circumstances, but by different regulatory costing models, benchmarks and glide paths. The Commission is therefore finalising a Recommendation on the regulatory treatment of fixed and mobile termination rates which sets clear and consistent principles for national regulators on the relevant costs to be taken into account when analysing termination markets and setting tariff obligations (IP/08/1016, MEMO/08/438).

For further information:

The Commission's letter will be made available on:

http://circa.europa.eu/Public/irc/infso/ecctf/library?I=/commissiondecisions

On the Article 7-procedure under which today’s letter was adopted see: MEMO/08/620

On the Recommendation on termination rates see:

http://ec.europa.eu/information_society/policy/ecomm/library/public_consult/termination_rates/index_en.htm

Annex

Glide path for mobile termination tariffs as notified by ARCEP under the Article 7 procedure

MNO (mainland France)
Currently imposed MTR ceiling up to 30/6/2009
Proposed MTR ceiling up to 30/6/2010
Proposed MTR ceiling up to 31/12/2010
SFR & Orange
6.5€c/min
4.5€c/min
3.0€c/min
Bouygues
8.5€c/min
6.0€c/min
4.0€c/min


[Graphic in PDF & Word format]

[ Figures and graphics available in PDF and WORD PROCESSED ]

Source: Comparative analysis by the European Regulators Group

http://www.erg.eu.int/doc/publications/erg_08_41_mtr_update_snapshot_081020.pdf


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