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IP/09/357

Brussels, 5th March 2009

Telecoms: Commission welcomes Romanian regulator's commitment to reduce mobile termination rates

The European Commission has welcomed, in a letter published today, the Romanian telecoms regulator's move to bring its regulation of mobile termination rates – wholesale charges operators pay each other for connecting calls on their networks – in line with the forthcoming Commission Recommendation. In the meantime, the Commission also called on the regulator to align the mobile termination rates charged by the third and fourth mobile operators in Romania with those allowed for the two largest operators. The Commission's letter acknowledged the reasonably low level of rates for the two largest operators (5.03 eurocents per minute) and said that in the absence of objective cost differences, this interim rate should also be applied to the other operators as soon as possible. As part of the cost of a call between customers of different operators, termination rates are included in everyone's phone bill and therefore eventually paid by the calling consumer.

Competition Commissioner Neelie Kroes said: "I welcome the Romanian regulator's efforts to help consumers by bringing termination rates down to similar levels for all mobile operators and to move to truly cost-oriented termination rates. In the meantime, the reduction now achieved of termination rates charged by the three challengers is a very positive interim step."

"This step in reducing mobile termination rates under the EU telecoms rules is encouraging news for Romanian consumers," said Viviane Reding, the EU Telecoms Commissioner. "I am confident that the Romanian regulator's commitment to align the regulation of mobile termination rates with the forthcoming Commission Recommendation will further strengthen this development."

On 28 January 2009, Romania's telecoms regulator, the National Authority for Communications (ANC), notified the European Commission of its proposal to regulate the wholesale market for voice call termination on individual mobile networks in Romania – in other words, the level of mobile termination rates. This is the first time ANC has proposed to regulate this market according to EU telecoms rules. ANC defined five distinct national markets for voice call termination, which correspond to the mobile networks of the operators active in Romania, i.e. Vodafone Romania, Orange Romania, Cosmote RMT, Telemobil and RCS & RDS. ANC designates each of these operators as holding significant market power in their networks.

With regard to Vodafone Romania and Orange Romania, ANC proposes to impose a maximum average termination rate of €0.0503 per minute. For the other operators, ANC proposes a glide path with different tariffs until 1 July 2010, where Cosmote and Telemobil will meet the tariff of €0.0503 per minute and RCS & RDS will apply a tariff of €0.0567 per minute. These rates are about 30% lower than the ones currently charged. This asymmetric regulation of termination rates is temporary and will be replaced by a symmetric obligation during 2010 once a cost-oriented model is defined, based on the future Commission Recommendation on termination rates.

The Commission welcomes the efforts made by the Romanian regulator to analyse the mobile voice call termination market and to bring its regulation in line with EU telecoms rules. However, the Commission also has commented on the asymmetric regulation of mobile termination rates, which can only be justified by objective cost differences for a short period of time. In the absence of such differences, the Commission invites ANC to apply symmetric termination rates. In this respect, the Commission takes note of the ongoing work of ANC to finalise a cost model in 2010 which will consider efficient cost and will take into account the future Commission recommendation on termination rates.

Background

Termination rates - the wholesale charges charged by the owner of a network for calls arriving on their network - are not market prices, but regulated by national telecoms regulators such as ANC.

With the aim of spurring competition among operators and lowering phone charges for European consumers, in June 2008 the Commission launched a public consultation on the future regulation of voice call termination rates in the EU (IP/08/1016). At present, the termination rates set by national telecoms regulators diverge widely across the EU, from €0.02/min (in Cyprus) to around €0.15/min (in Bulgaria) for mobile calls. This distorts competition between operators from different countries and between fixed line and mobile phone operators. As a result of the public consultation, the Commission is finalising a Recommendation which will give guidance on harmonising termination rates in Europe (adoption planned for early April).

National regulators are required to notify regulatory proposals to the Commission and other national regulators under the EU telecoms Framework Directive (the so-called Article 7 procedure – see MEMO/08/620). The Commission and other regulators may comment on notified draft measures to the national regulator concerned. The Commission may also, following in-depth investigation, require a regulator to withdraw a proposed measure due to incompatibility with EU law.


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