Regulator bows to pressure to rethink interconnection rate cuts

20 Sep 2006

The Belgian Institute of Postal Services and Telecommunications (BIPT) says it has been forced to rethink plans to cut mobile interconnection rates in the country due to strong opposition from cellcos and the National Competition Council (NCC). In early March the BIPT proposed to regulate mobile interconnection rates, in a move that would see the three operators cut their tariffs by almost half over the next two years. The proposals would see BASE cut its interconnection tariff from EUR0.196 to EUR0.1041, whilst Belgacom Mobile would lower its prices from EUR0.1266 to EUR0.0656 and Mobistar EUR0.1598 to EUR0.0821. Mobistar and Belgacom have threatened legal action against the proposed cuts, a position backed by the NCC, which is concerned that whilst the three operators will each have their rates cut by 50%, they will still be paying different amounts. BASE, the market’s smallest operator, says it is concerned that if it complies with the cut at the proposed levels, it will fall further behind its rivals, leading to the development of a de facto market duopoly for the larger operators. It claims that the proposed regulations allow the incumbent operator to continue to demand interconnection rates that are much higher than the marginal cost of its network, which it says have now been ‘written off in full twice by the exorbitant profits made by the historical operators on interconnection alone’. BIPT president Eric Van Heesvelde told Dow Jones that cuts will still be implemented, but that the regulator is currently redrafting a proposal that will suit all parties. It has declined to give a timetable for a new proposal. ‘The reduction will still happen,’ he said. ‘But we have to reduce the gap between the companies.’

Belgium, BASE Company, Orange Belgium