Vodafone Ireland challenges ComReg on contentious MTR fees

1 May 2013

The Irish Independent reports that Vodafone Ireland has launched a legal challenge in the courts in a bid to prevent the regulator, the Commission for Communications Regulation (ComReg), introducing new fees on 1 July 2013. Vodafone argues that the proposed model could lead to increased bills for end users adding that ComReg had erroneously applied the wrong model for calculating the new mobile termination rates (MTRs). Vodafone Ireland Counsel Niamh Hyland is quoted as saying that the regulator’s proposed fees would have

‘some effect on retail levels’, although she conceded that the precise impact was unclear. According to Ms Hyland ComReg did not have its own costing model for MTRs in place in time for its decision and instead benchmarked the proposed fees based on an average of rates imposed in seven other European markets.

Vodafone Ireland says that the new fees will cut what it can charge other mobile network providers from EUR0.0368 (USD0.0483) per minute as end-2012 to EUR0.0104 per minute from 1 July. The operator is also challenging the legitimacy of interim charges brought in by ComReg in January this year and affecting all domestic mobile operators. However, the cellco points out that its turnover for call termination services has slumped from EUR95.7 million in its fiscal H2 2007, to EUR31.8 million for the six months ended 30 September 2012. Central to Vodafone’s challenge is the assertion that the regulator’s ‘price-control decision instrument specifies that mobile phone call termination rates be set in accordance with pure long run incremental cost (LRIC) methodology, but no such pure LRIC model has yet been elaborated by ComReg for Ireland’.

As reported by TeleGeography’s CommsUpdate, on 20 December 2012 the watchdog published its final decision (Ref: ComReg 12/139) on weighted average wholesale mobile termination rates (MTR) in the country, following an appeal from Vodafone. The move followed its publication of Decision D11/12 in November last year, which designated six mobile service providers with significant market power (SMP) in the Republic, and imposed a number of obligations on each of them, including an obligation of cost orientation. At the same time the watchdog published Decision D12/12, noting, amongst other things, the SMP mobile providers in question as Hutchison 3G Ireland (H3GI), Lycamobile Ireland (Lycamobile), Meteor Mobile Communications (Meteor), Telefonica Ireland (O2), Tesco Mobile Ireland (TMI) and Vodafone Ireland (Vodafone). However, on 18 December Vodafone Ireland appealed to the High Court against Decision D11/12 (insofar as that decision imposed a cost orientation obligation on operators) and also against ComReg Decision D12/12, which directed each mobile operator with SMP to ensure that its weighted average wholesale MTR is no more than EUR0.0260 per minute for the period from 1 January 2013 to 30 June 2013. The decision also imposed a maximum permitted wholesale MTR of EUR0.0104 per minute on each SMP mobile operator with effect from 1 July 2013. ComReg 12/139 also noted that, notwithstanding the appeal brought by Vodafone, decisions D11/12 and D12/12 remain in force in their entirety.