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MEMO/08/708

Brussels, 13 November 2008

Telecoms: Commissioner Reding welcomes commitment of Italy's telecoms regulator AGCOM to further reduce mobile termination rates as an "important step in the right direction"

In a high-level visit to Brussels today, Corrado Calabrò, the president of the Italian telecoms regulator AGCOM (Autorità per le Garanzie nelle Comunicazioni) offered important commitments to EU Telecoms Commissioner Viviane Reding to bring the regulation of mobile termination rates in Italy in line with European law and best European practice. If fully implemented, these commitments could end concerns of Commissioner Reding on the level and partial asymmetry of mobile termination rates in Italy. In a letter sent on Monday, the Commission had asked AGCOM to review its proposed price caps on mobile termination rates for Telecom Italia, Vodafone, WIND and H3G Italia which were considered not in line with the principles of cost orientation and effective competition. Already since some time, the Commission has observed a continued pattern of inconsistency in regulatory approaches on termination rates across the 27 Member States. These differences cannot be explained by different national circumstances alone, but by different costing models, benchmarks and glide paths chosen by national regulators. In June, the Commission had published a draft Recommendation on the regulatory treatment of fixed and mobile termination rates, which reiterates clear and consistent principles for national regulators on the relevant costs to be taken into account when they analyse their termination markets and set tariff obligations (IP/08/1016, MEMO/08/438). The commitments offered today by the Italian telecoms regulator take into account the approach recommended by the Commission, leaving open the potential for further steps towards cost-orientation once the approach is fully implemented.

"I welcome the swift and clear response given today by the Italian regulator to the Commission's letter of Monday. If the commitments offered today are fully implemented, this would be an important step in the right direction. It could also become a good example of constructive cooperation between national regulators and the Commission in the interest of competition and consumers", said Viviane Reding, the EU Telecoms Commissioner. "For consumers to benefit from lower prices for calls to mobile phones, it is imperative that the charges for wholesale mobile termination services are set at cost efficient level. I am therefore glad that AGCOM is bringing its regulation now in line with European law and best European practice. I particularly appreciate AGCOM's firm intention to develop by 2010 a cost model in line with the forthcoming Commission Recommendation on the regulatory treatment of fixed and mobile termination rates. The Commission expects AGCOM to honour the important commitments offered today and we will monitor their implementation closely."

"I wanted to meet Commissioner Reding today to illustrate AGCOM’s response to the Commission’s letter of comments. We are glad to work hand in hand with the Commission in the interest of consumers and industry. We have presented today a balanced long term regulatory strategy on mobile termination rates that would give stability to the mobile sector in Italy and at the same time provide increasing benefits in terms of decreasing consumer prices. We believe that the plan presented today, that we have now finalised taking into account the Commission comments, is a sustainable transition strategy from the existing regulatory account regime to the new model. We are in full support of a Commission Recommendation on a common costing methodology for setting termination in Europe and hope that it can be adopted soon, taking into account also the comments of the European Regulators Group," said Corrado Calabrò President of AGCOM.

AGCOM had notified to the Commission in October a draft regulatory measure concerning the second round market review of wholesale voice call termination services on individual mobile networks in Italy. In a letter sent on Monday, the Commission had reminded AGCOM that mobile termination rates should be reduced to the cost level of an efficient operator employing efficient technology with the implication of eventually arriving at symmetric rates for all operators.

Taking into account the comments made in the Commission's letter, AGCOM, through its President Corrado Calabrò and its Secretary-General Roberto Viola, presented the changes that will be introduced to the notified draft measures:

  • to develop and adopt by 2010 a cost model in line with the forthcoming Commission Recommendation on Termination Rates;
  • to implement full symmetry of mobile termination rates by 2012;
  • to lower the 2011 rates from 5.9 eurocent (initial AGCOM proposal) to 5,3 eurocent for the three incumbents and from 7.0 eurocent (initial proposal) to 6.3 eurocent for the later entrant;
  • to achieve full symmetry in 2012 at the level of 4.5 eurocents (without prejudice to further revision downwards once the Commission Recommendation on Termination Rates is in force);
  • to revise in 2010 the values applicable in the year 2011-2012 on the basis of the "long-run incremental cost"-model developed in accordance with the forthcoming Commission Recommendation.

Background:

In its letter sent on Monday, the Commission asked Italy's telecoms regulator to review its costing methodology which forms the basis of its proposed price regulation. The mobile termination price caps to be imposed on the four mobile network operators in Italy for 2011 were still high compared to those in other EU Member States, and reflected also asymmetries deemed problematic by the Commission. The Commission therefore had asked AGCOM to review its approach.

The letter sent by the Commission to AGCOM on Monday is a letter sent under the so-called "Article 7" procedure, foreseen in Article 7 of the Framework Directive of the EU's Telecoms Rules. This procedure leaves scope to national telecoms regulators on how to achieve effective competition, but requires them to notify draft regulatory measures to the Commission to ensure consistency in the evolving single telecoms market. Where these measures concern market definitions and significant market power analyses, the Commission has the possibility to require the national regulator to withdraw the measure. Where the measures concern regulatory remedies – as in the present case of mobile termination rates –, the Commission may make comments of which the national telecoms regulator should take utmost account. The commitment made by AGCOM reflects this legal obligation under Article 7 of the Framework Directive.

For further information:

The Commission's letter of Monday is available at:

http://circa.europa.eu/Public/irc/infso/ecctf/library?I=/commissiondecisions

On the Article 7 procedure under which today’s letter was adopted see: MEMO/08/620

On the draft Commission Recommendation on the regulatory treatment of fixed and mobile termination rates see:

http://ec.europa.eu/information_society/policy/ecomm/library/public_consult/termination_rates/index_en.htm

Annex

Glide path for mobile termination price caps
as initially notified by AGCOM


July 2009
July 2010
July 2011

Telecom Italia
7.7€c/min
6.6€c/min
5.9€c/min

Vodafone
7.7€c/min
6.6€c/min
5.9€c/min

WIND
8.7€c/min
7.2€c/min
5.9€c/min

H3G
11.0€c/min
9.0€c/min
7.0€c/min


AGCOM revised glide path presented on 13 November 2008




July 2011
July 2012
Telecom Italia


5.3€c/min
4.5€c/min
Vodafone


5.3€c/min
4.5€c/min
WIND


5.3€c/min
4.5€c/min
H3G


6.3€c/min
4.5€c/min





Mobile termination rates in the EU - snapshot1[1]

[ Figures and graphics available in PDF and WORD PROCESSED ]


[1] Source: Comparative analysis by the European Regulators Group

http://www.erg.eu.int/doc/publications/erg_08_41_mtr_update_snapshot_081020.pdf


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