Telecoms: Commission concerned over German regulator's failure to notify mobile termination rates
European Commission - IP/08/1860 03/12/2008
Brussels, 3 December 2008
The European Commission, in a letter made public today, requested the German telecoms regulator, Bundesnetzagentur ("BNetzA"), to notify it of all German mobile operators' termination rates, the wholesale tariffs charged by the operator of a customer receiving a phone call to the operator of the caller's network. Mobile termination rates are relatively high in Germany compared to several other Member States. The Commission underlines that these rates need to be notified to it under the EU telecoms rules ("Article 7 procedure"). This procedure, provided for by the European Parliament and the EU Council of Ministers since 2002, aims to ensure more coherent and transparent termination rates across Europe, thereby avoiding distortions of competition between operators from different Member States. BNetzA has failed twice, in 2006 and now again, to include these rates in its analysis of the market for wholesale mobile call termination. In its letter, the Commission therefore alerts BNetzA that in case it continues to fail to comply with this obligation, the Commission, as guardian of the Treaties, will consider opening an infringement proceeding for non-compliance with EU legislation.
"I strongly advise Bundesnetzagentur to notify the termination rates of the German mobile operators to the Commission without any further delay", said EU Telecoms Commissioner Viviane Reding. "Mobile termination rates represent a key part of the price remedy and play a key role in ensuring effective competition in the EU telecoms market. Germany cannot be granted an exemption from what is required under the EU telecoms rules and what is common practice in other Member States. The German regulator should follow the examples of other national telecoms regulators which do not only notify their cost control remedies in detail, but in some cases, such as in Italy, even promptly take the necessary regulatory measures to bring down termination rates to more competitive levels following concerns by the Commission."
Competition Commissioner Neelie Kroes added: "Lower mobile termination rates have a positive impact on consumers' phone bills and on competition between mobile phone companies. It is therefore necessary that regulators bring the current high termination rates down to levels which reflect the real costs. It is equally important that the regulatory process is transparent for all stakeholders and that operators can quickly adapt their strategies on the market to the new regulatory requirements. I regret that Germany does not seem to apply a regulatory policy which is compatible with these principles."
In its letter the Commission has rejected a justification provided by BNetzA for not including the actual mobile termination rates in its notified draft regulatory measure. In BNetzA's view, the rates do not need to be notified to the Commission under Article 7 of the Framework Directive. The Commission has on many occasions expressed its view that the setting of the level of mobile termination rates has a clear cross-border effect and must be notified under the EU telecoms rules. Generally, other regulators notify all elements of price remedies, as part of their market analyses.
This is why the Commission will consider opening infringement proceedings against Germany if BNetzA continues to refuse the notification of mobile termination rates in Germany.
The regulatory measure proposed by BNetzA determines mobile termination rates with a special authorisation procedure under which the mobile operators active on the German retail market ask the regulator for approval of their rates. BNetzA argues that – due to the short deadline (10 weeks) for such authorisation procedure – it is not possible to proceed with a notification to the Commission. However, in the Commission's view national procedures cannot justify non-compliance with the "Article 7 procedure".
The Commission's letter to BNetzA was sent under the "Article 7 procedure", foreseen in the EU Framework Directive which is part of the EU 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. When these measures concern market definitions and significant market power analyses, the Commission can require the national regulator to withdraw the measure. When 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.
While termination rates are on a downward trend in the EU as a result of regulatory intervention at national level, the Commission has observed continuous inconsistency in average prices and regulatory approaches across Member States which cannot solely be explained by different national circumstances, but by different price regulation. 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 they analyse their termination markets and set tariff obligations (IP/08/1016, MEMO/08/438). In the case of Germany, the Commission has never had the chance to formally comment on the actual termination rates.
For further information:
The Commission's letter will be made available on:
On the Article 7-procedure see:
On the Recommendation on the regulatory treatment of fixed and mobile termination rates see:
[ Figures and graphics available in PDF and WORD PROCESSED ]
Source: Comparative analysis by the European Regulators Group