EU Asks Slovakia's Regulator to Reconsider Mobile Termination Rates

­In a letter sent today, the European Commission has repeated its calls for the Slovakian telecoms regulator, Telekomunikačný úrad Slovenskej republiky (TÚSR), to bring mobile termination rates (MTRs) to more competitive levels in Slovakia.

"Mobile termination rates in Slovakia are amongst the highest in Europe. Although I am pleased that TÚSR is committed to reducing them, more substantial reductions are necessary," said Viviane Reding, the EU Telecoms Commissioner. "For consumers in Slovakia to benefit from lower prices for calls to mobile phones, it is imperative that charges for wholesale mobile termination services are set at the level of the cost of an efficient operator, and not above. I therefore hope that, following our letter today, the Slovak telecoms regulator will see the benefits for competition and consumers and answer the Commission's call for further reductions."

The Commission has restated the importance of using long-run incremental costing methodologies for calculating the efficient costs of termination, rather than the fully allocated costing approach proposed by TÚSR. Although the latter is only a transitional measure until the implementation of the Commission's Termination Rates Recommendation, the Commission says that it considers that TÚSR can already make now important steps towards an efficient MTR level in Slovakia. This can be achieved through a more robust application of TÚSR's proposed price control including benchmarking against only those countries where MTRs are already close to the cost of an efficient operator.

In addition, the Commission also expressed doubt that authorising, for a substantial time, a higher asymmetry for the new entrant than applied previously is an appropriate means of maintaining smaller operators' incentives to expand and become efficient over time.

On 7 August 2009, TÚSR notified the Commission of the details of the costing method to be applied by three mobile operators (Orange, T-Mobile and Telefónica O2 Slovakia) when calculating mobile termination costs in Slovakia.

This notified measure also follows provisional measures adopted by TÚSR as part of a dispute settlement on the level of MTRs in Slovakia. The provisional MTR (applicable from 1 August 2009) for the two largest operators (Orange and T-Mobile) is set at 7.92 eurocent/minute, while the third entrant O2 is allowed to charge a higher MTR at 9.25 eurocent/minute (representing a higher level of asymmetry than applied in 2008).

The Commission's letter urges TÚSR to re-consider its proposed transitional methodologies and the foreseen increase in asymmetry with a view to moving more swiftly to the efficient MTR level. This would in turn help avoid the need for sudden, sharp reductions in 2012 and facilitate a smoother transition to the efficient costing methodology set out in the Commission's Recommendation.

All EU national regulators should apply the common EU approach to termination rates by the end of 2012. Only regulators with limited resources may use different approaches for a limited period as long as they achieve a pro-competitive result.

Posted to the site on 7th September 2009