Telecoms: Commission calls on Bulgarian regulator to reduce mobile termination rates
European Commission - IP/09/166 29/01/2009
Brussels, 29 January 2009
In a letter published today, the Commission calls on the Bulgarian telecoms regulator, the Communications Regulation Commission (CRC), to take action to further reduce mobile termination rates that operators charge to connect the call of another operator's customer. Termination rates are an important cost element when consumers call a phone connected to another network. They are included in everyone's phone bill and eventually paid by the calling customer. In 2008, mobile termination rates in Bulgaria where, with 15.09 eurocent/minute, the highest in the EU (EU average: 8.7 eurocent/minute). The Commission also asks CRC not to discriminate when setting the level of termination rates between fixed and mobile networks and to apply similar termination rates for mobile calls originating from other mobile and fixed networks.
“Mobile termination rates in Bulgaria are the highest in Europe. I am pleased that CRC is committed to reducing them, but more substantial short term reductions are necessary. For consumers to benefit from lower prices for calls to mobile phones, it is imperative that charges for wholesale mobile termination services are set at the level of the cost of an efficient operator, and not above," said Viviane Reding, the EU Telecoms Commissioner.
"CRC's approach is a positive first step towards more price competition in the Bulgarian mobile phone market." said EU Competition Commissioner Neelie Kroes. "I am sure that Bulgarian consumers will benefit from CRC's initiative, although I would have preferred a more ambitious approach leading to termination rates which truly reflect the costs."
In its letter made public today the Commission calls on the Bulgarian telecoms regulator to introduce a faster reduction of mobile termination rates that would result in lower rates than those currently proposed. In its draft measure, the regulator set a target to achieve mobile termination rates at a level of 7.6 eurocents/minute (for peak traffic) in 2010. However, according to the European Regulators Group, which brings together the EU's 27 national telecoms regulators, this level is already undercut today by many Member States: Cyprus (2.01 eurocents/minute), Sweden (4.55 eurocents), Finland (5.29 eurocents), Austria (6 eurocents), Slovenia (6.38 eurocents), Romania (6.78 eurocents) and France (6.85 eurocents). Also regulators in France and Italy recently have taken decisions, in close coordination with the Commission, to bring down mobile termination rates (see IP/08/1810 and MEMO/08/708). The French regulator ARCEP set the target efficient cost-based mobile termination rate between 1 and 2 eurocents/minute, to be eventually reached by all mobile operators.
The Commission also expresses concern that termination rates in Bulgaria currently charged by mobile operators are higher for calls that are made by fixed line subscribers than for those made from mobile networks. This discriminates against fixed phone networks and their subscribers and results economically in substantial indirect subsidies in favour of mobile operators. The Commission therefore calls upon Bulgaria's regulator to apply symmetric prices for terminating calls, irrespective of whether they originate from fixed or mobile phones.
Under EU law, CRC is required to take the Commission's letter with comments into utmost account in its final decision.
While termination rates are on a downward trend in the EU as a result of regulatory intervention, the Commission has observed that important inconsistencies remain between both average prices and regulatory approaches across the Member States. These differences cannot be solely explained by different national circumstances, but rather by different costing models, benchmarks and glide paths chosen by national regulators. In addition to commenting on national measures with regard to termination rates as in the present case, the Commission is therefore finalising a Recommendation on the regulatory treatment of fixed and mobile termination rates (formal adoption planned for March/April) 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).
The letter from the Commission to the Bulgarian regulator CRC was sent under the "Article 7" procedure, foreseen in Article 7 of the EU telecoms rules' Framework Directive (see MEMO/08/620). 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 analyses of whether operators have significant market power, the Commission has the possibility to require the regulator to withdraw the measure. Where the measures concern regulatory remedies, the Commission may make comments of which the national telecoms regulator should take utmost account. The measure notified by the Bulgarian regulator concerns the first round market review of wholesale voice call termination services on individual mobile networks in Bulgaria.
The Commission letter is available, as of 12:00 today, at:
On the draft Recommendation on the regulatory treatment of fixed and mobile termination rates see:
Table 1: Interim glide path proposed for Mobiltel and Cosmo Bulgaria Mobile
Table 2: Interim glide path proposed for BTC
ERG (08) mobile termination rates update - snapshot1
[Graphic in PDF & Word format]
[ Figures and graphics available in PDF and WORD PROCESSED ]
 All prices have been converted from BGN into euro (1.9558 BGN=1 euro) and are approximate values only. The draft decision should be referred to for the original values expressed in BGN.