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IP/09/1845

Brussels, 30 th November 2009

Telecoms: Commission welcomes Lithuanian proposal to reduce mobile termination rates

In a letter just sent, the European Commission welcomed the proposal of the Lithuanian regulatory authority for telecommunications, Ryšių reguliavimo tarnyba (RRT), to decrease mobile termination rates (MTRs) in Lithuania by around 60% in the coming two years. MTRs are the wholesale prices which mobile operators charge for terminating calls on their respective networks. As a result of RRT's proposal, mobile termination rates in Lithuania will be amongst the lowest in the EU. In addition, as from 31 December 2012 at the latest, RRT plans to set MTRs at the level of the cost of an efficient operator, based on a cost model in line with the Commission's Recommendation on Termination Rates ( IP/09/710 ). However, RRT wanted to reserve the possibility to introduce a transitional period until July 2014 prior to reaching efficient termination rates. The Commission's letter stresses that no such additional transitional period should be granted. The Commission also reminded RRT that the obligation for operators to grant access to their respective networks to competitors is unilateral and unconditional.

Competition Commissioner Neelie Kroes said, "Effective network access and cost-based termination rates for all Lithuanian mobile network operators should ensure a level playing field for operators and lower prices, to the benefit of consumers in Lithuania."

"By imposing low, symmetric tariffs for the provision of mobile termination services, the Lithuanian regulator makes an important step in the direction of creating the right incentives for market players to become efficient and allows Lithuanian consumers to benefit from lower prices for calls to mobile phones, " said Viviane Reding , the EU Telecoms Commissioner.

RRT proposes to maintain the existing regulatory obligations on open access, non-discrimination, transparency and accounting separation for all three mobile network operators in Lithuania. RRT also plans to impose on operators a glide path gradually reducing MTRs until 31 December 2012 to below 2 eurocents per minute. As of 1 January 2013, MTRs should be based on the costs of an efficient operator, calculated in line with the Commission's Recommendation on Termination Rates (see IP/09/710 ). However, in view of possible further substantial decreases in MTRs as a result of this proposal, RRT also foresees a possibility to grant a transitional period for reaching efficient cost based termination rates until July 2014 at the latest.

The Commission points out that according to its Recommendation on Termination Rates, termination charges should be set at the level of efficient costs by 31 December 2012 and no further transitional period for reaching cost based mobile termination rates should be allowed.

In June 2009, RRT had already adopted target termination rates applicable to Mobile Network Operators, but had not notified them to the Commission. The Commission reminded RRT of the need to notify such measures under Article 7 of the Framework Directive.

RRT further proposes to adapt access obligations, so that Lithuanian mobile operators cannot refuse to provide access to competitors who charge the same or lower termination fees than themselves. The Commission emphasised that access obligations are unilateral and unconditional by nature, and should in principle not be subject to conditions prevailing on markets other than the relevant market, in this case another termination market. Therefore, the Commission invited RRT to review the scope and wording of the access obligation imposed on the mobile operators, taking account of these considerations.

Background

The Commission's comments on RRT's proposal follow the so-called " Article 7 procedure ", under the Framework Directive of the EU telecoms rules ( MEMO/08/620 ). Under this procedure, regulators are required to notify the Commission of draft regulations. Where these concern market definitions and analyses of whether operators have significant market power, the Commission can require the regulator to withdraw the measure. Where they concern regulatory remedies – as in the present case – the Commission may make comments of which the regulator must take utmost account.

The Commission's letter to the Lithuanian regulator will be published shortly at:

http://circa.europa.eu/Public/irc/infso/ecctf/library?l=/commissionsdecisions&vm=detailed&sb=Title

Annex

Average MTRs in 32 European countries as of January 2009

Figures and graphics available in PDF and WORD PROCESSED


Source: European Regulators Group, MTR Benchmark Snapshot ERG (09) 23_final_090604


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