Impact of termination rates on mobile tariffs

I refer to the article Mobile Phone Use: Rates In Malta Above EU Average, Mobile Phone Penetration Still On The Rise (May 26). The MCA wishes to provide some clarifications regarding the statements made about mobile tariffs in Malta and their relationship with the Mobile Termination Rates (MTR) which are regulated by the Malta Communications Authority.

The article in question states that "According to the Commission, the main reason behind Malta's high mobile call rates seemed to be the level of MTRs set by the regulator.

These charges are much higher than the EU average and are finally paid by the consumers."

Evidence clearly indicates that a reduction in wholesale mobile termination rates, that is, the prices that mobile operators charge other operators to terminate calls on their network, does not automatically result in a similar reduction in retail prices.

This can be clearly observed in mobile telephony markets across Europe where, for example, Latvia, according to the Commission's 15th Implementation Report, had as at 2008 the lowest average retail price in the EU of €0.04, whereas during 2009 it had a wholesale termination rate that was marginally higher than the rate in Malta (€0.0875 in Latvia as against €0.0866 in Malta). The same can be observed for other countries such as Bulgaria.

In an analysis carried out by the MCA, on the relationship between wholesale termination rates and retail rates paid by consumers, it was observed that there is no direct relationship between wholesale mobile termination rates and retail mobile rates and that reductions in the retail rates are predominantly brought about by increasing competitive pressures.

It is important to reiterate, also in light of the European Commission's comments, that the EU legal framework for the regulation of electronic communications does not, in practice, support the regulation of mobile retail tariffs. In fact, mobile retail rates are not directly regulated in any EU member state.