Reding sets 2012 deadline for mobile call price cuts

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Despite opposition from a majority of EU member states, Information Society Commissioner Viviane Reding is set to move forward with plans to significantly cut the revenues of mobile telecoms operators by February 2012, EURACTIV has learned.

Mobile phone operators will have until then to adopt a new system for calculating the so-called “termination rates” that they charge each other for taking calls over their networks (see background). Under the Commission’s plans, telecoms companies will have to reduce them from the current average of €9 cents per call to between €1.5 and €3 cents.

“Commissioner Reding intends to have the date of 1 February 2012 as the deadline,” Martin Selmayr, the Commission’s telecoms spokesman, told EURACTIV. Brussels is aiming to eliminate what is perceived as cross-subsidisation between telecoms operators, which currently favours large companies and hampers competition in the sector. With this measure, the Commission is also looking to indirectly boost investment in Next Generation Networks (NGNs; see EURACTIV 04/02/2009).    

The EU executive’s hardline position comes after telecoms experts from the EU’s 27 member states raised doubts about the Commission’s approach. According to a diplomatic source, a majority of member states in the Council’s telecoms committee yesterday (18 February) voted against the Commission’s proposed recommendation. Selmayr, however, rejected this interpretation, saying the vote was split but generally in favour of the proposal.

Germany and Spain are leading a group of sceptical countries opposed to any proposals from Reding, because they could potentially undermine their national champions, Deutsche Telekom and Telefonica respectively.

However, the Commission seems to take little account of their opinion. Indeed, according to Selmayr, the proposal that will be formalised “in early April” is the boldest of all the options available.

draft Commission paper obtained by EURACTIV lists three different dates for moving to the new system: 1 February 2012, 1 July 2012 and 1 January 2013. If the Commission goes ahead as planned, it will therefore opt for the earliest possible deadline. 

“There will be less than three years for national authorities to adapt to the new system,” Selmayr confirmed. This would represent a departure from previous statements, in which Selmayr had indicated that the Commission would give regulators a three-year deadline to implement its recommendations. 

However, in a concession to operators in Central and Eastern Europe, some member states will be given extra time to adapt.

Commission recommendations are not legally binding. That is why the backing of the Council and the Parliament is not necessary, despite usually being taken into account. However, even if not binding, a recommendation carries significant political weight, and has a strong impact on markets and national authorities. Reding’s plan can be blocked only by a negative vote within the Commission itself.

Mobile termination rates are a wholesale connection charge that operators have to pay to transmit a phone call towards a competitor's network.

In the EU, every call made to a customer on a different network (i.e. from Base to Proximus in Belgium, or from T-Mobile to E-Plus in Germany) costs the caller's company an average of €9 cents. For international phone calls, the fees are higher. These charges are reflected in the final price charged to consumers.

In other developed countries such as the US, termination rates do not exist, but operators directly charge consumers for receiving calls.

  • Early April: Commission to adopt recommendation on mobile termination rates.
  • 1 Feb. 2012: Proposed deadline for slashing mobile termination rates.

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