The European Commission has issued a recommendation concluding that the German regulator (BNetzA) does not follow the EU recommended approach for the calculation of fixed termination rates (FTRs), following a three-month in-depth investigation. In its proposal BNetzA sets FTRs for the newly defined 19 operators based on the methodology previously applied for Deutsche Telekom (DT), which is contrary to the EU regulatory framework. If applied the rates would be 200% higher than the rates in the vast majority of the Member States which follow the recommended methodology. These costs are ultimately included in call prices paid by consumers and businesses.
The Commission's request follows a three month investigation, during which BEREC, the body of European Telecoms Regulators, again expressed its strong support for the Commission's position. The Commission now requests BNetzA to withdraw its proposal or to amend it so that the FTRs for the 19 operators are in line with EU telecom rules. In case BNetzA, after having taken the utmost account of the Commissions recommendation, does not decide to amend its draft proposal it has to provide a valid justification.
The termination rates are the rates telecom operators charge each other to deliver calls between networks, and each operator has the market power over access to customers on its own network. These costs are included in call prices paid by consumers and business. The 2009 Recommendation on Termination Rates aims at harmonizing 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 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.
This case is closely linked to a previous Phase II investigation. At the time BNetzA's proposal concerned the methodology of calculating mobile termination rates of the 19 new alternative fixed operators which was not in accordance with the recommended approach. The Commission issued a Recommendation requiring BNetzA to amend its original proposals and to set up termination rates for those operators in line with recommended model. The currently notified measure concerns the actual level of the termination rates which are based on the previously notified methodology.
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