Termination a new step ahead, or not...

Some of my friends are celebrating today after Commission's new heartbreaking announcement regarding termination rates. Others, will be surprised and astonished, as I am now.

What happened, can be the result of the hot summer in Brussels or of a new trend. You to decide.

On 17/08 the Commission released a comment "Telecoms: European Commission comments on the German regulator's proposals for the regulation of fixed and mobile termination rates" on German's NRAs proposal not to regulate alternative operators and MVNOs termination rates.

BNetzA's argumentation is very simple - in my view - since termination rates of fixed alternative operators are the same of DT and MVNOs , mobile termination rates the same as the hosting operators, there's no need to regulate. Regulation would be not proportionate to the case and would do more trouble than its worth.

What is Commission point of view?

"The Commission stressed that commercial agreements together with a non-discrimination
obligation cannot always ensure interconnection and that operators do not raise termination rates above costs."

That's true, but it's also true that we don't have a clue of termination costs of these operators.

"It has invited BNetzA to impose an access (interconnection) obligation and a cost
orientation obligation on each of the alternative fixed network and virtual mobile network
operators, taking into account the Commission's recent Recommendation on termination rates
(IP/09/710)."

What are the implications for fixed operator?

All 56 small operators should calculate the costs of providing termination services and set termination rates on costs. [can you imagine reviewing and negotiating the new tariffs?]

Potentially some of them will have higher termination rates of DT, therefore, I am sure DT will not accept them and go to court. Moreover, it is possible it will have an impact also on the retail market.

NOTE:

I am not sure 56 termination rates are consistent with the recent recommendation on termination rates that advocate one single termination rate for mobile networks. What do you think?

What are the implications for MVNOs?

MVNOs will have to set termination rates at the same levels of the negotiated MVNO termination price (for non full MVNOS) or combination of their costs. Also in this case it is probable that we will have several MTRs for each small MVNOs.

NOTE:

Again, as above I am not sure the commission read its own recommendations. What do you think?

My view

Very interesting development of a very boring and old subject. I don't think the effort is worth the costs (potentially very high for operators and regulators) of developing costing models, negotiating new tariffs, changing business models and retail rates. It will be interesting to see the development of this new trend and monitor its implication. What do you think?

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