Europe opens consultation on uniform termination rates

The European Commission has opened up a new public consultation which eases the bloc towards more regulation and towards a maximum EU-wide mobile voice termination.

While it might not be the sexiest aspect of the telco world, termination rates is an issue which has yet to disappear despite efforts of the European Commission to create a bloc where all the member states get along.

In short, maximum EU-wide mobile voice termination, both fixed and mobile, are necessary when an operator needs to connect a customer where the receipt of the call is on someone else’s network. As few operators have 100% geographical coverage in their markets, this is an example of coopetition, where the telcos work together to ensure commitments can be delivered to the customer.

However, in some markets, though the Commission is steering clear of finger pointing, there might be a dominant player with a network which exceeds anything rivals could muster together, opening the door to market abuse. The European Commission is particularly sensitive to monopolies or any scenario which could lead to distorted competition, therefore this seems like a perfect opportunity to step-in with the red tape.

Should there be an instance where a dominant market leader looks to abuse this position by increasing termination charges for rivals, we suspect the cost could be passed onto customers. This could potentially harm competition by forcing more subscriptions onto the dominant players network, further distorting the concept of reasonable.

Although this consultation will aim to create a compulsory and consistent approach to termination rates across the bloc, it is not the first time Europe has attempted to intervene.

In 2009, the European Commission published a recommendation with the aim of achieving consistency between the various approaches applied by national regulatory authorities when regulating wholesale termination rates. Of course, the word you have to take note of is Recommendation. Divergences between the maximum termination rates in Member States still remain, and it seems Brussels has had enough.

Interestingly enough, one of the reasons the European Commission is allegedly looking into this area once again is the idea of cross-border competition. Although this is an assumption on our part, looking to increase cross-border competition in the telco space suggests there is one-eye on moving towards pan-European operators. This in turn could lead to greater market consolidation across the bloc.

The move towards more pan-European operations is something which would certainly be of interest to the telcos, though there are too many variances when it comes to the regulatory landscape. It should of course be considered a goal for those who have the financial capabilities, as scale offers numerous benefits when it comes to the business of making money.