Europe promises more mobile tariff cuts

EU telecoms minister and nemesis of European mobile operators, Viviane Reding, has proposed bring mobile phone call costs down further, by slashing voice call termination rates as much as 70 per cent.

On Thursday the commissioner said that the EC has started a public consultation on the future regulation of voice call termination rates – the wholesale tariffs charged by operators for connecting phone calls from other networks.

Determined by the national telecoms regulators, these charges presently result in very divergent rates across the EU. Reding said that mobile termination rates range from Eur0.02 per min in Cyprus to over Eur0.18 per min in Bulgaria, and overall are nine times higher than fixed line termination rates.

The EC claims this variance distorts competition between operators from different countries and between fixed line and mobile phone operators.

“Disparate termination rates across the EU and large gaps between fixed and mobile termination rates are serious barriers to achieving a Single European Telecoms market that benefits competition and consumers,” said Reding. “Call termination markets in the EU need a regulatory plumber. Over the next three years, I expect greater consistency and coordination to bring the costs for mobile phone calls down by around 70 per cent from the current level.”

Reding said consumers should expect to pay lower retail prices as a result of these cuts, although if the fallout from the cuts in voice roaming rates is anything to go by, the operators will find another way to make up the revenue shortfall by hiking process elsewhere.

However, the move is likely to be welcomed by smaller mobile operators such as 3 UK, which often have to pay large sums to the incumbents for call termination, while at the same time trying to compete with flat rate deals.

The Commission warned operators that the gaps between fixed and mobile termination rates and between mobile termination rates imposed by national regulators cannot be justified by differences in the underlying costs, networks or national characteristics.

To give some idea of the billions at stake here, the EC claims that fixed operators are presently indirectly subsidising mobile operators by paying higher termination rates for calls made from fixed lines to mobiles. This cross subsidisation is estimated at Eur19bn in the UK, Germany and France for 1998-2002.