Europeans Pay over €10 Billion a Year in Spurious MTRs

The European Competitive Telecommunications Association (ECTA) yesterday claimed that lucrative wholesale charges imposed by incumbent mobile operators for connecting calls to each other’s networks are both excessive and discriminatory. As a result, European consumers are being penalized.

ECTA, a group of telecom operators and ISPs, called on EU Commissioner Mrs. Viviane Reding to enforce a cut in these charges when she publishes her proposals on termination rates later this month.

Currently, the average EU mobile termination rate is 9 euro cents a minute, although rates between member states and between networks vary significantly. Mrs. Reding said earlier this month that she wants to see mobile termination rates cut to between one and two euro cents by 2012. ECTA agrees that a significant decrease is needed.

ECTA believes the current mobile termination charges are excessive, making it expensive for customers to call other networks; that these rates are not based on costs; and importantly, that they distort competition as they allow big operators to offer their large customer bases calls within their networks that do not attract termination charges, making it difficult for smaller, fixed and mobile new entrant operators to compete.

Innocenzo Genna, Chairman of ECTA, said: “Customers have for years faced excessive prices because of the very high termination rates being charged when they make calls to mobile numbers. Our estimate is that over the last ten years, across the 27 EU countries, this amounts to a total in excess of €100bn of consumers’ money. The cost of termination is totally disproportionate to the costs incurred: mobile termination retail rates are on average 9-10 times higher than fixed termination rates. They also vary greatly – between two to 18 euro cents – despite very similar cost levels.”

Mr. Genna added: “ECTA’s position is that all termination rates should be based on cost and currently they quite evidently are not. The large differences between on-net and off-net prices – on-net prices often are for free or very cheap – suggest that incumbent mobile operators’ costs are significantly less than their actual termination fee, since the cost of receiving a call from the same network or from another network is the same.”

In response to the concern that changes or caps to termination rates will result in an increase in mobile charges for customers, and more specifically the introduction of charges for receiving calls as well as making them, as happens in the US and other countries, Mr. Genna said, “European customers currently do not pay for receiving calls, but making calls is much more expensive than making and receiving calls taken together in the US. That is partly why in the US on average customers make eight times as many mobile calls as in Germany, for example.”

Read the full press release.

See also: Mrs. Viviane Reding’s Speech on broadband network competition at the ECTA Annual Conference.

Source: ECTA

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