The European Commission has opened an in-depth investigation into the proposal of the Romanian telecoms regulator ANCOM to continue applying the current price caps for the wholesale voice call termination services offered by Romanian fixed and mobile operators. The termination rates that ANCOM proposes to keep were set in 2014 on the basis of figures which are now outdated. The Commission notes that Romanian termination rates remain high in comparison to the termination rates in the other EU countries.

The Commission considers that the ANCOM proposal to maintain both fixed termination rates (FTRs) and mobile termination rates (MTRs) at current levels is not compliant with the Regulatory Framework. The Romanian regulator has not provided adequate justification that these rates are still appropriate in the light of recent market developments. 

ANCOM proposes to continue imposing on all regulated operators an FTR cap of 0.14 eurocents/min and an MTR cap of 0.96 eurocents/min. This price is included into the final bill of the consumer for the calls to a number of a different operator. The proposed tariffs were first set in 2014 on the basis of a pure BU-LRIC model developed in 2012-2013. Despite the fact that the model is now outdated, ANCOM does not envisage a review of the model or an update of at least some data inputs, as other national regulators have done in such circumstances. In its proposal ANCOM explains that it does not expect to start the lengthy process of revising its pure BU-LRIC model before next year, following completion of the review of the EU Recommendation on Termination Rates and the adoption of the European Electronic Communications Code.   

The Commission considers that ANCOM has not provided enough evidence that its proposal not to make any changes to its cost model is in line with the Regulatory Framework currently in force. The Commission is concerned in particular that the FTRs and MTRs set in 2014 no longer reflect the costs of a hypothetically efficient operator, as required in the EU Recommendation on Termination Rates. In addition, based on the latest BEREC figures (published in June 2017), the proposed FTR is the highest BU-LRIC rate in the EU and the proposed MTR is above the average EU pure BU-LRIC rate. The Commission is therefore concerned that, in view of the general downwards trend of termination rates following model updates in other Member States, the gap between the Romanian termination rates and termination rates in the rest of the EU is going to increase even more over the coming years.        

The Commission concludes that the proposed FTRs and MTRs are not compliant with the Regulatory Framework, since ANCOM has not demonstrated that the price control remedy is appropriate in the light of the present market conditions. Moreover, these rates would very likely lead to the creation of a barrier to the internal market, as Romanian telecoms operators would continue to be able to charge FTRs and MTRs at levels higher than average tariffs in the other Member States using a pure BU-LRIC model.

The Commission now has three months to discuss the case with ANCOM, in close cooperation with the body of European regulators (BEREC), in order to remove any elements giving rise to serious doubts as to compliance with EU law. The Commission may, at the end of the investigation period, either lift its reservations or issue a Recommendation under Article 7a of the Framework Directive, which will require ANCOM to amend or withdraw its draft measure. In the case where ANCOM did not amend or withdraw its draft measure accordingly, absent valid reasoned justification, the Commission could reserve its right to assess whether to consider other legal measures available.

Background

Termination rates are the rates telecom operators charge each other to deliver calls between networks, and each operator has market power over the access to customers on its own network. These costs are included in call prices paid by consumers and businesses. The 2009 Recommendation on Termination Rates aims at harmonising these rates and bringing them down to a cost-efficient level. Whilst largely successful, some divergences, however, remain across the EU. In this respect, on 15 March 2016 the Commission launched a public consultation which aims to evaluate the impact of the Recommendation, to assess whether to maintain or amend it and to evaluate whether further action at EU level is needed to pursue the policy objectives of promoting competition, EU citizens' interests and developing the internal market. The Commission has reported on the consultation earlier this year.

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