European Commission - Press release
Digital Agenda: Commission queries French regulator's proposal to set higher wholesale prices for Free Mobile, Lycamobile & Oméa Telécom; starts investigation
Brussels, 13 April 2012 - The European Commission has expressed serious doubts about the plans of the French telecoms regulator (ARCEP) to set higher mobile termination rates (MTRs) for Free Mobile, Lycamobile and Oméa Telécom. MTRs are the rates mobile networks charge other networks for delivering voice calls, and are ultimately included in the prices customers pay for calls. ARCEP has already fixed cost-based MTRs for existing mobile operators in France as from January 2013, in accordance with EU rules. ARCEP now proposes to set MTRs at a higher level to compensate these new mobile entrants for the prices they pay to use existing mobile networks and the claimed financial effects resulting from traffic imbalances. The Commission has serious doubts about ARCEP's justification of higher MTRs on the grounds that it is more expensive for new companies to provide call termination services. For these reasons, the proposal might not comply with EU telecoms rules.
European Commission Vice President Neelie Kroes said: "French consumers are already on track to benefit from ARCEP's decision to impose cost-based mobile termination rates on existing mobile operators. The entrance of new operators ensures that the French mobile market is competitive and vibrant, giving greater choice to consumers. However, imposing higher mobile termination rates for new entrants only make sense if this reflects real higher costs. "
The Commission Recommendation on Termination Rates foresees the possibility of so-called "asymmetric MTRs" for a transitional period where new entrants incur higher costs than the established mobile operators. ARCEP proposes to set asymmetric MTRs for the next two years. The rate for new entrants would be € 0.024/min in the first semester of 2012 compared to € 0.015 /min for established operators. Rates would gradually reduce but there would still be almost 40% difference between MTRs by the end of 2013.
However, the proposal in this specific case does not appear to be supported by sufficient evidence of such higher costs. In particular, the Commission considers that Free Mobile, Lycamobile and Oméa Telécom can benefit from the same economies of scale and/or scope as the established mobile operators. Prices new entrants pay to use the established operator's network are in principle negotiated in a competitive environment. In the Commission's view, the level of these prices should not necessarily justify setting higher MTRs. The Commission, first, considers that the traffic imbalance is not due to the small size of the new entrants but rather to their distinct commercial strategies compared to the established operators. Secondly, it has not been sufficiently demonstrated that new entrants incur losses on calls made outside their own network.
The Commission's decision to start an in-depth investigation starts a second phase under Article 7a of the Telecoms Directive (MEMO11/321). ARCEP now has three months to work with the Commission and the body of European telecoms regulators (BEREC) on a solution to this case.
In March 2012, the Commission received ARCEP's proposal regarding its plans to regulate the mobile termination rates of the new mobile entrants in France (Free Mobile, Lycamobile and Oméa Telécom). ARCEP proposes to set them higher than those of the established mobile operators on the basis of the Commission's 2009 Recommendation (see IP/09/710 and MEMO/09/222).
Under the new powers of Article 7a of the Framework Directive, the Commission can open a so-called second phase investigation during which the Commission, in close cooperation with BEREC, will discuss with the national regulatory authority concerned how to amend its proposal in order to make it compliant with EU law. During that period the implementation of the proposal is suspended.
The Commission's letter sent to the French regulator will be published at: