EU looks to slash termination rates by 70 per cent

Not afraid of confrontation, the EU's telecoms commissioner, Viviane Reding, has announced a draft proposal that seeks to cut the termination fees charged by mobile operators by up to 70 per cent. Arguing her corner, Reding points to the present discrepancy between fixed and mobile termination fees--with fixed rates currently around €0.5 per minute, with their mobile equivalent much higher at around €0.9 or more, depending on the EU state in question. European operators have reacted to this suggestion claiming that a 70 per cent cut would be crippling, adding that the cell phone industry had already seen annual declines for mobile termination fees of 10-15 per cent.

Mobile operators generate around 20 per cent of revenue from termination fees with fixed customers indirectly subsidising mobile operators by paying higher termination rates for calls made from fixed lines to mobiles. This cross-subsidisation is estimated by market researchers at €10 billion in Germany for 1998-2006 and €19 billion in the U.K., Germany and France for 1998-2002. The EU has stated that the consultation with the industry will end on September 3, and the Commission plans to make a formal recommendation for a law in October.

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