The European Commission has given French regulator ARCEP three months to come up with a new plan on mobile termination rates(MTRs), due to doubts over the legality of ARCEP’s current proposals.
ARCEP currently plans to set higher MTRs for new entrants Free Mobile, Lycamobile and Oméa Telécom, to account for traffic imbalances and compensate the new entrants for the cost of using existing mobile networks. However, the EC argues the move could breach its telecom rules, noting ARCEP has already set cost-based MTRs for incumbent operators.
The Commission states that competition in the French market means new entrants enjoy the same economies of scale as established players, and notes that traffic imbalances are more about the new entrant’s commercial strategies. It also argues ARCEP hasn’t demonstrated those start-ups incur losses on calls made outside their network.
“French consumers are already on track to benefit from ARCEP's decision to impose cost-based mobile termination rates on existing mobile operators. The entrance of new operators ensures that the French mobile market is competitive and vibrant, giving greater choice to consumers. However, imposing higher mobile termination rates for new entrants only make sense if this reflects real higher costs,” digital agenda commissioner Neelie Kroes says.
Despite its concerns, the EC’s telecom rules do allow national regulators to deploy asymmetric MTRs for a brief time to give new entrants a leg-up during their startup phase, when costs may be higher. ARCEP’s plan is to employ that method over the next two years, allowing the new cellcos to charge €0.024 per minute in 2012 compared to the €0.015 of incumbent operators. According to the EC, the gap between new and established players will stand at 40% by end-2013 despite assurances the new player’s MTRs will be gradually reduced.