Cell Phones in Great Britain - EU asks Ofcom to review 3G wholesale tariffs

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EU asks Ofcom to review 3G wholesale tariffs

Sunil Sood

2006-11-28, 7:33 am

The European Commission has expressed concerns as to how wholesale tariffs,
charged by the five UK mobile operators for terminating calls to their
customers, have been assessed. In the Commission's view, Ofcom's proposed
tariffs keep termination values higher than necessary due to 3G spectrum
cost valuations which risk overestimating the costs

The Commission therefore asks the UK watchdog to reconsider the valuations.
OFCOM's approach would be detrimental to fair competition in the UK's mobile
market and lead to higher consumer prices for consumers.

EU Information Society and Media Commissioner Viviane Reding wrote a "letter
of comment" to the Office of Communications, or Ofcom, arguing that
operators were charging each other too much to interconnect calls.

"I am concerned that Ofcom's approach to calculate 3G spectrum costs could
hinder the movement towards lower mobile interconnection prices," Reding
said.

A Commission official said on average mobile phone operators charge about 8
euro cents (five pence) a minute to permit other companies to connect to
their customers. By contrast, fixed-line operators charge only 0.8 euro
cents a minute.

He said the end result was to redistribute transfer money from fixed-line
operators to mobile users.

Copy of the Commission's letter is available via
http://europa.eu.int/rapid/pressRel...&guiLanguage=en

Regards
Sunil
and Hutchinson 3G -- charge for terminating calls between customers on
different networks.

andy

2006-11-28, 7:33 am

Sunil Sood wrote:
> The European Commission has expressed concerns as to how wholesale tariffs,
> charged by the five UK mobile operators for terminating calls to their
> customers, have been assessed. In the Commission's view, Ofcom's proposed
> tariffs keep termination values higher than necessary due to 3G spectrum
> cost valuations which risk overestimating the costs
>
> The Commission therefore asks the UK watchdog to reconsider the valuations.
> OFCOM's approach would be detrimental to fair competition in the UK's mobile
> market and lead to higher consumer prices for consumers.
>
> EU Information Society and Media Commissioner Viviane Reding wrote a "letter
> of comment" to the Office of Communications, or Ofcom, arguing that
> operators were charging each other too much to interconnect calls.
>
> "I am concerned that Ofcom's approach to calculate 3G spectrum costs could
> hinder the movement towards lower mobile interconnection prices," Reding
> said.
>
> A Commission official said on average mobile phone operators charge about 8
> euro cents (five pence) a minute to permit other companies to connect to
> their customers. By contrast, fixed-line operators charge only 0.8 euro
> cents a minute.
>
> He said the end result was to redistribute transfer money from fixed-line
> operators to mobile users.
>
> Copy of the Commission's letter is available via
> http://europa.eu.int/rapid/pressRel...&guiLanguage=en
>
> Regards
> Sunil
> and Hutchinson 3G -- charge for terminating calls between customers on
> different networks.

I'm surprised that 3 termination charges are still higher. I've seen it
argued in other countries that this assymmetric charging is effectively
a subsidy of the newer entrants by the older ones. The launch of 3
WePay seems to me to take the piss out of these arrangements and
suggest it's time to level them out..

Sunil Sood

2006-11-30, 10:33 pm

"Sunil Sood" <news@soods.freeserve.co.uk> wrote in message
news:4t2r32F11q0bpU1
@mid.individual.net...
>
> A Commission official said on average mobile phone operators charge about
> 8 euro cents (five pence) a minute to permit other companies to connect to
> their customers. By contrast, fixed-line operators charge only 0.8 euro
> cents a minute.
>
> He said the end result was to redistribute transfer money from fixed-line
> operators to mobile users.

Unsuprisingly, the fixed line operators agree.

BT believes strongly that the proposals in Ofcom's consultation document get
the balance wrong, with the result that users of fixed phones in particular
will be significantly over-charged," said BT.

BT and Cable & Wireless argued that fixed-line telephone users shouldn't
have to pay over the odds when calling 3G mobile phone users, as it is only
a voice call and their customers are not benefitting from the extra data
services 3G operators are providing to their own customers.

"[Mobile operators] overpaid for the licenses and have so failed to generate
the additional data revenues on which their calculations were based, This is
business. Companies do make mistakes. But in normal competitive business
life companies and their shareholders bear the costs of those mistakes and
are not able to pass their costs on to their own customers, or in this case
the people who are direct customers of other networks, not their own," it
added.

Cable & Wireless said some of Ofcom's assumptions when calculating its price
cap are too uncertain for use when taken over the four year price control
period that the regulator is trying to impose. Cable & Wireless added that,
based on Ofcom's proposed rates, 3G operators could even over-recover GBP1.5
billion in the final year of the capping period.

Regards
Sunil

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