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UK mobile operators may have to trim termination rates

23 января 2009

The Competition Commission said Thursday that the amount that U.K. mobile operators charge each other to connect calls on their networks should be cut.

Reductions in mobile termination rates directly hurt the revenue of mobile carriers. European Commission telecommunications chief Viviane Reding has pushed to to reduce MTRs across the region, arguing they don't reflect the cost of providing the service.

Upholding an appeal by BT Group PLC against communication regulator Ofcom, the Competition Commission, in a submission to its appeals tribunal, determined that the mobile termination rates, or MTRs, for connecting to the networks of Telefonica SA's O2, France Telecom's Orange, Deutsche Telekom's T-Mobile and Vodafone Group PLC should be reduced to 4.0 pence per minute by 2010/11 from Ofcom's original recommendation of 5.1ppm.

The tribunal also determined that the charge for connecting to Hutchison Whampoa's 3 network should be cut to 4.4ppm by 2010/11, or 1.5ppm below Ofcom's 2007 decision.

"In the past, reductions in MTRs have led to lower retail prices for calls and we believe a similar pattern should emerge as a result of this decision," said Kevin Russell, chief executive of 3 UK, in an emailed statement after the ruling.

Vodafone UK has already factored in the new rates, said a company spokesman.

The Competition Appeals Tribunal, or CAT, hasn't come to a final decision. The next case-management conference is Feb. 2. It wasn't immediately clear if any of the operators would appeal the decision.

The European Commission said last year that MTRs are nine times higher than the equivalent fixed-line charges, which in turn means fixed-line operators and customers are indirectly subsidizing mobile operators.

The commission's draft guidelines, published last year, could see operators face a 70% cut in MTRs and have been slammed by Vodafone, which could see its revenue fall by 5%, according to analysts.

BT said Thursday's decision is a "useful step along the road to lower rates," though it remains uncertain when the new rates will be implemented. In an emailed statement, BT said the decision still leaves MTRs far higher than fixed rates and believes the best way forward is for the adoption of the commission's recommendations.

National regulators across Europe have also begun to make their recommendations on the issue. In October, French telecom regulator Arcep proposed sharper than expected cuts to MTRs, leading to immediate criticism from France Telecom, Vivendi SA's SFR and Bouygues SA's Bouygues Telecom.

Late last year, Italian telecom regulator AGCOM also said it would cut MTRs to EUR0.45 by 2012.

Источник: Total Telecom

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