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European Commission

Press release

Brussels, 13 August 2012

Digital Agenda: Commission suspends Latvian proposal to uphold excessive level of wholesale rates for fixed telephony and starts an in-depth review

The European Commission has expressed serious doubts about a new proposal from the Latvian telecoms regulator (SPRK) regarding fixed termination rates which would negatively affect consumers in Latvia. Termination rates are the rates telecoms networks charge each other to deliver calls between networks, and each operator has market power over access to customers on its own network. These costs are ultimately included in call prices paid by consumers and businesses.

SPRK proposed to apply very high fixed termination rates of 0.29 eurocents per call and 0.26 eurocents per minute from 1 April 2013 whilst the same rates can be much lower in other Member States (e.g. 0.08 eurocents per minute in France). Such level of rates is not in line with the Commission's 2009 Termination Rates Recommendation under the EU telecoms rules. The methodology applied by SPRK on fixed termination rates does not ensure that these rates are set on the basis of the costs of an efficient operator and therefore they result in rates which are too high by EU standards.

European Commission Vice President Neelie Kroes said: "I am determined to ensure that the regulated termination rates including the fixed ones are brought down to costs of efficient operator in all Member States without any unnecessary delay."

In the letter sent to SPRK today, the Commission explains that the new rates in this proposal do not comply with the principles and objectives of EU telecoms rules which require Member States to promote competition and the interests of consumers in the EU, as well as the development of the Internal Market.

This is the second time that the Commission has used its new powers regarding national remedies under Article 7a of the Telecoms Directive in Latvia. The procedure must be concluded within three months.

Background

In March 2011, SPRK proposed termination rates which were also not in line with the Commission's 2009 Recommendation, however the Commission did not yet have powers to suspend the remedies proposed. The Commission already then emphasised the need for an appropriate price control using a cost methodology which would be in line with the Commission's 2009 Recommendation.

The Commission has today issued this serious doubts letter because SPRK's proposal would result in fixed termination rates significantly higher than those recommended in the Commission's Recommendation.

"Article 7" of the new Telecoms Framework Directive requires national telecoms regulators to notify the Commission, BEREC (the Body of European Regulators for Electronic Communications) and telecoms regulators in other EU countries, of measures that they plan to introduce to address the lack of effective competition in the markets in question.

Under the new powers of Article 7a of the Framework Directive, the Commission, in close cooperation with BEREC will, over the next three months discuss with SPRK how to amend its proposal in order to make it compliant with EU law. In the meantime, implementation of the proposal is suspended.

The new rules also enable the Commission to adopt further harmonisation measures in the form of recommendations or (binding) decisions if divergences in the regulatory approaches of national regulators, including remedies, persist across the EU in the longer term.

Useful Links

The Commission's letter sent to the Latvian regulator will be published at:

https://circabc.europa.eu/w/browse/0fc4cbf9-3412-45fe-84bb-e6d7ba2f010e

Digital Agenda website

Neelie Kroes' website

Follow Neelie Kroes on Twitter

Contacts :

Ryan Heath (+32 2 296 17 16); Twitter: @RyanHeathEU

Linda Cain (+32 2 299 90 19)


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