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IP/09/1999

Brussels, 23 December 2009

Telecoms: European Commission renews calls for lower mobile termination charges in Poland

The European Commission has again reminded Polish telecoms regulator, Urząd Komunikacji Elektronicznej (UKE), that it should not unnecessarily prolong exceptions allowing higher mobile termination charges for certain operators. Mobile termination rates (MTRs) are tariffs that mobile operators charge each other for connecting calls to their customers on their network, and are eventually included in call prices. As in a recent proposal ( IP/09/1832 ), UKE intends to allow a new operator, CenterNet, to charge operators much more for calls to its customers than other established mobile operators. UKE would reduce these charges which are currently on average double those of its competitors in 2011 so as to match other operators' charges by the end of 2015. The European Commission today wrote to UKE calling on it to follow the guidelines for setting mobile termination charges adopted in May ( IP/09/710 ) by substantially reducing the gap between CenterNet's and other operators' charges.

"I am disappointed by UKE's proposal since we have only recently issued critical comments on a very similar measure. The current difference between CenterNet's and larger operators' termination charges is exceptionally high by European standards and UKE does not seem to be ready to lower these rates quickly. On the contrary, asymmetry will only end in 2015, which is much later than what we require in our Recommendation on Termination Rates. That is why I once again call on UKE to reduce CenterNet's prices right away," said Viviane Reding, the EU Telecoms Commissioner.

Competition Commissioner Neelie Kroes said, " Allowing a new entrant to charge termination rates that do not reflect true costs for such a long period of time gives the wrong signal. Polish consumers should not be barred from benefiting as early as possible from lower prices for mobile calls and operators should be given the right incentive to become efficient."

The European Commission today called on the Polish regulator to revise its draft regulation and set lower fees for CenterNet in its final measure. In its letter, the Commission reminded UKE that higher MTRs for new entrant mobile operators such as CenterNet may only be allowed for a limited period of time. From 31 December 2012, the latest date for applying the EU guidelines on termination rates, they should be brought down to the level of efficient costs and temporary differences should be phased out within 4 years following market entry ( IP/09/710 ). This would require CenterNet's rates to be set at an efficient level by May 2013 at the latest – whereas according to the current measure the asymmetry would only end in December 2015.

On 30 November 2009, UKE notified the Commission of its planned regulation of the termination rates of CenterNet, the new entrant to the mobile phone services market. CenterNet currently charges 204% more than its major competitors, but would only be required to lower this to 141% from the end of May 2011, and thereafter gradually so that CenterNet reaches the same level as other mobile operators on 1 December 2015. UKE says this is justified because CenterNet is a new entrant with a smaller customer base but has not analysed the magnitude of these effects.

The Commission has also reminded the Polish regulator of the importance of consultations at European level ahead of price regulations. It was only from this draft measure that the Commission learned of another decision in October 2009, when UKE set CenterNet's current wholesale charges. Under EU telecoms rules, the Commission and other national regulators in the EU should have been notified of this price regulation.

It also called on UKE to enforce transparency rules to enhance certainty and predictability for all market players. UKE proposes to require CenterNet to publish the terms and conditions of its termination services and any modifications on its website. With regard to future changes, UKE stipulates that they should be notified without delay but no later than one week after they become applicable. The Commission believes that only publishing changes that have already been introduced can undermine certainty and predictability in the market and called on UKE to revise the proposed transparency rules in its final measure.

Background:

The Commission's comments to UKE follow the " Article 7 procedure " under the Framework Directive of the EU telecoms rules ( MEMO/09/539 ).This procedure requires national regulators to notify the Commission of their draft regulations in the telecoms markets. Where they concern market definitions and analyses of significant market power, the Commission can require the regulator to withdraw the measures. 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 Polish regulator will be published at:

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


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