The European Commission has blocked a proposal by the German Telecoms Regulator (BNetzA) to set fixed termination rates three times (300%) higher than the average of countries which follow the recommended approach set out in EU telecoms rules.
Termination rates are the rates telecoms networks charge each other to deliver calls between networks, and each operator has market power over access to customers on its own network. These costs are ultimately passed on to consumers and businesses.
Under BNetzA's proposal, fixed termination rates would range from €0.0036/minute (peak) to €0.0025/minute (off-peak). Operators in countries which follow the EC's recommended approach pay on average €0.001/minute.
European Commission Vice President Neelie Kroes stated: "My job is to deliver a Single Market for telecoms for all EU citizens. All EU countries - big and small - have signed up to, and are implementing, the rules which put this in place. No country can be allowed to divert us from this goal. I urge BNetzA to bring forward a new proposal that delivers lower consumer prices and helps us build a telecoms Single Market."
Following the "serious doubts" letter sent today by the Commission, BNetzA now has three months to work with the Commission and the body of European telecoms regulators (BEREC) on a solution to this case. In the meantime implementation of the proposal is suspended.
Background
At the beginning of February 2013, BNetzA notified the Commission of its plans to regulate fixed termination markets based on a method calculation different to that set out in the Commission's Recommendation on Termination Rates. BNetzA proposes to use the Long-Run Average Incremental Cost+ (LRAIC+) method of calculation, whereas the Commission recommends the Bottom Up Long-Run Average Incremental Cost (pure BU-LRIC) approach.
This is the second time this year that the Commission has disagreed with Germany on its manner of implementing national remedies under Article 7a of the Telecoms Directive.
"Article 7" of the Telecoms Framework Directive requires national telecoms regulators to notify the Commission, BEREC (the Body of European Regulators for Electronic Communications) and telecoms regulators in other EU countries, of measures that they plan to introduce to address the lack of effective competition in the markets in question.
The new rules enable the Commission to adopt further harmonisation measures in the form of recommendations or (binding) decisions if divergences in the regulatory approaches of national regulators, including remedies, persist across the EU in the longer term.
