Phone users to save €2bn as EC squeezes network operators

Europe's phone users stand to save €2bn over the next three years following today's publication of the European Commission's guidance on termination rates.

Europe's phone users stand to save €2bn over the next three years following today's publication of the European Commission's guidance on termination rates.

The EC wants national regulators to use a marginal cost-based method to limit the wholesale fees charged by network operators to connect a call received from another operator's network. These fees are hidden in everyone's phone bill.

Mobile termination rates are up to 10 times higher than fixed rates, the commission said. They vary from €0.02 per minute in Cyprus to €0.15 per minute in Bulgaria, with an average of €0.855 per minute.

Higher mobile termination rates make it harder for fixed and small mobile operators to compete with large mobile operators, the commission said.

These divergences, and differing regulatory approaches, undermine the single market and Europe's competitiveness, it said. Eliminating price distortions between phone operators across the EU will lower consumer prices for voice calls within and between member states, saving business and household customers at least €2bn between 2009 and 2012. It could also encourage new investment, it added.

The strongly-worded recommendation says specifically that national termination rates should be based purely on the real costs that an efficient operator incurs to establish the connection.

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