EC consultation steps up pressure on telcos over termination fees

The European Commission has unveiled the draft of a plan to force down termination fees for calls to mobile phones, opening up the plan to a two-month consultation with the European Union's telecommunications industry.

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The European Commission has unveiled the draft of a plan to force down termination fees for calls to mobile phones, opening up the plan to a two-month consultation with the European Union's telecommunications industry.

"Call termination markets in the EU need a regulatory plumber. Over the next 3 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," the EU's telecommunications commissioner Viviane Reding said in a statement.

Phone companies charge each other termination fees for the task of accepting calls from one operator's network to another's. The rates vary widely across the E.U.: termination fees for calls to mobiles range from €0.02 (1.5 pence) per minute in Cyprus up to €0.18 (14 pence) per minute in Bulgaria.

The fees are much lower for calls to fixed lines: an average of just over €0.0057 (.0045 pence)per minute local call termination, the Commission said.

"Disparate termination rates across the EUand large gaps between fixed and mobile termination rates are serious barriers to achieving a single european telecoms market that benefits competition and consumers. The consumer pays the price for these gaps between national regulatory policies," said Reding.

Mobile phone operators argue that efforts to create a one-size-fits-all model for all termination fees across the EU is unworkable, and that regulating the fees should be left to national telecommunications regulators, who have set termination fees in their national markets for many years.

Setting the rates "is a core competence of the national regulators and should remain so," said David Pringle, spokesman for the mobile phone industry trade group, the GSM Association.

Operators' costs vary by a factor of four, depending on population density, topography and employment costs, he said. "It's much more expensive to serve a large rural, mountainous area than a densely populated city, for example."

Mobile phone operators also argue that pan-EU action by the Commission is unnecessary because national regulators are already cutting termination fees, Pringle said. "The Commission wants a 70 percent reduction in termination fees, but national regulators already have plans to do that," he said.

The consultation with the industry will end on 3 September, and the Commission plans to make a formal recommendation for a law in October, it said.

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