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| Mobile charges, round two |
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| Wednesday, 19 September 2007 | |
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French regulator an unwitting ally of ‘centralist anti-industry sentiment’ from Brussels over cartelised and exorbitant termination fees.
The European Commission, in the formidable form of ICT dominatrix Viviane Reding, has backed calls by the French telecom regulator for ARCEP for lower mobile-to-mobile wholesale termination rates. ARCEP moved at the end of July to “prevent any distortion of competition arising from excessive call termination charges. This type of problem could affect the operation of either the fixed or mobile telephony markets and would have a direct impact on consumers. ARCEP has, ever since it was established, sought to reduce mobile call termination charges and has in fact managed to cut the cost of these services from over 30 eurocents per minute at the end of the 1990s to the current level of between 7.5 and 9.24 eurocents per minute in mainland France.” ARCEP added that “operators with large market shares could avoid having to pay mobile call termination charges by offering inclusive call packages restricted to calls to their own subscribers, ie solely on-net packages. Operators with smaller market shares would find themselves hard put to respond to this, as the price of call termination does not reflect the actual structure and level of mobile network costs. In the end, it would be mobile users who would pay the price of reduced competition.” Some weeks later (presumably having returned from their vacations on the beach), the EC has warmed to the idea. “The French regulator's proposal to lower mobile termination rates, as foreseen by our EU Telecom rules, is good news for consumers," said Reding, who is officially the EU's Telecoms Commissioner. "I congratulate ARCEP for making this move, which at the same time raises important questions of a European dimension. Should mobile termination rates in the EU be reduced further and eventually converge with fixed termination rates? What is the right balance between consumer benefits and the need to invest in mobile networks? And, finally and most importantly, what should be done to ensure that competition in the single market is not distorted between EU Member States, with operators in some Member States having to pay substantially higher mobile termination rates than in others? Let's not forget that the mobile industry is becoming truly pan-European, with operators often active in several EU countries." The Commission’s formal response to ARCEP noted that “termination rates should be based on the costs of an efficient operator – in the Commission's view the optimal method for setting price caps for mobile termination rates. The Commission recognises that, in certain cases, an asymmetry might be justified by objective cost differences which are outside the control of the operators concerned. The use of specific frequency bands, or substantial differences in the date of market entry which could justify higher termination rates during a reasonable transition period could lead to these differences.” With the mobile industry still bearing the bruises from having been dragged, kicking and screaming into the world of economic reality over roaming charges, this has all the makings of a new and bloodier assault. Once again, it pits free markets principles with the sectors hidden tendency to gouge its customers wherever possible. Sure, the market should always decide. But when it decides on systematic rip-offs as the best way to make money, it should be reined in as well. Jim Chalmers |
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