Lower costs for mobile operators - no effect on consumers yet

As from the beginning of this year, the two local mobile operators, Go Mobile and Vodafone, have cut their costs related to mobile termination rates by eight per cent, however this has not yet translated into lower costs to their customers.

The costs for mobile operators are also expected to decrease by a further eight per cent annually in the coming two years, according to a decision taken by the Malta Communications Authority (MCA) and approved by the European Commission.

According to EU rules, the national regulatory authorities, in Malta's case the MCA, in consultation with the industry, have to analyse their national markets for electronic communications and propose appropriate regulatory measures to address market failures and then notify their findings and proposed measures to the Commission and other national authorities.

In its first of such analyses regarding only one sector out of 18 regulated under EU law, MCA concluded that Vodafone and Go Mobile enjoy significant market power in providing wholesale mobile termination services. Thus, MCA decided to introduce, from the beginning of this year, a three-year plan for the two mobile operators to reduce the current mobile termination rates they charge each other and Maltacom by eight per cent per annum.

Currently, Go Mobile charges 5c8 and Vodafone 4c9 per call excluding VAT. Under the new mechanism, the charges will fall to 4c13 per call for both operators by January 1, 2008.

Commission sources yesterday told The Sunday Times that although mobile operators are not obliged by EU law to pass these savings on to their customers, natural competition expects that this is what will effectively happen as mobile operators have been given more leeway to compete.

The sources added that as to the other 17 electronic communication markets, the MCA is currently undertaking the necessary studies to determine the exact position of the Maltese market. If flaws are found, the MCA is expected to take the necessary action which will then be analysed by the Commission, as has already happened in the mobile termination rates market.

In a general progress report published by the Commission, it was stated that regular economic analysis by EU member states and the European Commission of competition in electronic communication markets and Commission scrutiny of draft national rules are paving the way to free markets, regulated solely by competition law. However, the Commission said that much remians to be done.

As of September 30, 16 EU member states had found no effective competition in one or more of the 18 electronic communications markets defined by the EU and had taken steps to boost competition in the markets concerned.

Five member states had found only partial competition in one or more of these markets and had imposed remedies where it was lacking. However nine member states had yet to notify the Commission on their analyses of any of these 18 markets. The Commission has already started infringement procedures against these nine countries.