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Mobile Termination Rates: Commission’s call for a drastic reduction of termination rates hinders industry’s long term capacity to invest and meet consumer demand

Date

07 May 2009

Sections

InfoSociety

BRUSSELS – In the light of the consistent reduction of mobile termination rates and retail tariffs over the past five years, ETNO sees no justification for such a drastic overhaul of termination rates.

“In 2008, revenue and investment growth in the telecoms industry have continued to shrink and reached their lowest level since 2003. Today’s recommendation risks further hindering the telecoms industry’s ability to invest and develop innovative packages for customers, in a context of economic uncertainty”, says Michael Bartholomew, ETNO Director.

Mobile termination rates have already been reduced by 40% over the past three years throughout the EU and will drop by a further 40% over the next three years, according to the gradual reduction plans established by national regulators. However, the proposal adopted by the Commission aims at a 70% reduction by end of 2012.

Furthermore, as demonstrated by the recent EC Implementation Report, the divergences between member states also tend to reduce, questioning the need for such a radical intervention.

ETNO regrets the absence of a thorough impact assessment of the proposed measure on the industry over the next three years and beyond the deadline for its implementation. The Commission presented contradictory figures ranging from ?26 to ?4 billion revenue loss for the industry, in addition to a ?30 billion revenue drop linked to already planned reductions.

The proposed reduction of mobile termination rates will not at all benefit the deployment of next generation access networks. It may on the contrary seriously reduce the ability of mobile operators to invest in next generation mobile broadband networks (LTE or 4G) which are essential to bridge the digital divide. Independent studies have also put into question the expected gains for consumers and highlighted potential negative effects on low spending customers, using mainly pre-paid cards[1].

Ultimately, ETNO is surprised that the recommendation was adopted without major modifications despite significant opposition from member states. At the latest meeting of Communications Committee, a majority of member states voted against the proposed text.[2]

“Thanks to the investment and innovation efforts of operators, the EU mobile market is one of the most competitive and innovative in the world, experiencing the highest penetration rate. Such a radical measure is not a good signal for the sector and could well put an end to one of Europe’s best success stories”, concluded Bartholomew.

For more information, please contact: Thierry Dieu, ETNO Communications Manager Tel: (32-2) 219 32 42 Fax: (32-2) 219 64 12 E-mail: dieu@etno.be

ETNO’s 42 member companies from 36 European countries represent a significant part of total ICT activity in Europe. They account for an aggregate annual turnover of more than 250 billion Euros and employ over one million people across Europe. ETNO companies are the main drivers of broadband and are committed to its continual growth in Europe.

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[1] Frontier Economics study

[2] 12 delegations voted against (Finland, UK, Germany, the Czech Republic, Estonia, Spain, Cyprus, Latvia, Hungary, Poland, Malta, Denmark), 10 delegations abstained (Belgium, Bulgaria, Ireland, Greece, Lithuania, Luxemburg, NL, Austria, Romania, Slovakia) and only 5 delegations voted in favour (France, Italy, Portugal, Slovenia, Sweden).

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