FNA slashes mobile termination rates by half

1 Dec 2010

Germany’s network regulator, the Federal Network Agency (FNA), has proposed a 50% cut in mobile termination rates (MTRs), in a move to bring the fees in line with European Commission targets. From 1 December the rate will fall to EUR0.0333 (USD0.0435) for Royal KPN’s local unit E-Plus and drop to EUR0.0337 for Spain’s Telefonica O2 Germany, from a previous rate of EUR0.0714 for both firms. The market’s two largest operators, UK-based Vodafone and incumbent Deutsche Telekom, will see their call termination charges fall from EUR0.0659 per minute to EUR0.0333 for the former and EUR0.0336 for the latter. For the first time, the announced rate cuts are provisional and subject to negotiations between market participants in Germany, as well as the commission and regulators in other European Union member states. Final rates will be announced by the end of the first quarter of 2011, but will be effective retroactively from 1 December 2010 until 30 November 2012. The regulator said it calculated the new MTRs on basis of the costs the providers claimed to have for operating their networks, but also took into consideration the interests in their investments and costs for spectrum.

According to Dow Jones Newswires, the country’s network operators have slammed the rate cuts, with DT spokesman Andreas Middel stating: ‘It is a disastrous decision, especially in the light of upcoming investment in fourth generation networks.’ Although agreeing in principle that MTRs have to decrease, E-Plus spokesman Guido Heitmann said that the cut was too significant as it will make planning more difficult for all market participants, while Rene Schuster, CEO of O2 Germany, said that the FNA’s decision is not helpful for further investment and hence harms customer’s interests. Although the regulator’s calculation can be questioned, no one has the power to veto against the new MTRs, the FNA noted.