Brussels calls for revision of mobile call rates decision

The European Commission is not satisfied with the way the Malta Communications Authority is calculating mobile termination rates used by local operators in the mobile industry and wants a revision of a decision taken last May.

According to Brussels, the MCA's ruling "does not promote efficiency".

The MCA decided that the mobile termination rates (MTRs) of operators in Malta should change every year by the same percentage as the average European rates, except when the European average falls or rises by more than 10 per cent. In that case, the change for rates in Malta would be capped at 10 per cent.

The Commission is contesting this type of calculation and insists that MTRs should be set at the real and actual cost faced by an efficient operator providing the service.

The Commission has invited MCA to revise its decision and to calculate MTRs in Malta on the basis of the termination rates applied in member states where such rates are linked to the costs of an efficient mobile phone operator. The Commission feels this would help ensure Malta's future compliance with the recently-adopted Commission Recommendation on Termination Rates, which says that termination rates in the EU should be set at the level of the cost of an efficient operator by the end of December 2012 at the latest.

Brussels also asked the MCA to notify other national regulators and the Commission of any future termination rates the MCA will set following its final decision in the matter.

A spokesman for the MCA said the Commission's letter had not yet been received but would be acted upon once it reached the authority.

MTRs are the wholesale fees charged by operators to connect a call from another operator's network and which finally are part of everyone's phone bill.

In Malta, Go Mobile charges a termination rate each time it receives a call from a Vodafone or Melita network subscriber and vice versa.

The Commission considers local MTRs to be high in EU terms and do not reflect actual costs.

The average termination rate charged by Maltese mobile networks and eventually passed on to customers in their monthly bills stood at 9.5c last year, higher than the EU average and among the highest in all the 27 EU member states.

According to last May's MCA decision, as from last month local networks had to reduce their MTR tariffs to a maximum of 8.6c. However, the Commission is still not satisfied with this new tariff and wants a revision.

According to a new set of guidelines issued by the Commission to all national regulators last May, MTRs at national level should be based only on the real costs that an efficient operator incurs to establish the connection. According to the Commission, these should come down to between 1.5c and 3c per minute by 2012.

In 2008, MTRs varied widely in the EU from 2c per minute in Cyprus to 15c per minute in Bulgaria, averaging at 8.55c per minute across the EU. These rates are 10 times higher than fixed termination rates.

The EU Executive said that higher MTRs made it harder for fixed and small mobile operators to compete with large mobile operators.

Brussels had warned that divergences, and differing regulatory approaches, undermined the EU Single Market and Europe's competitiveness.

A Commission study had concluded that eliminating price distortions between phone operators across the EU would lower consumer prices for voice calls within and between member states, saving business and household customers at least €2 billion between 2009 and 2012 and help investment and innovation in the entire telecoms sector.