Telekom-Control Commission announces reduction of termination fees for mobile phones

Telekom Austria and Mobilkom Austria identified as significant powers on interconnection market - Five interconnection decisions issued - Gradual reduction of termination fees in mobile market - Telekom Austria and Mobilkom: Significant powers on the interconnection market

Press release dated 3 August 2000

One of the bases for determining interconnection fees is the result of the market power study completed by the Telekom-Control Commission as of July 31, 2000. In the study, Telekom Austria and Mobilkom were again identified as companies with significant power on the Austrian interconnection market for the year 2000. In contrast, max.mobil is not considered to have significant power on the interconnection market.

Five interconnection decisions issued

In its session on July 31, 2000, the Telekom-Control Commission issued five different unanimous decisions regarding the interconnection of Telekom Austria/UTA fixed-link networks with the max.mobil network and the interconnection of the Mobilkom network with the mobile networks operated by tele.ring, Connect and max.mobil via Telekom Austria's transit network.

Along with these decisions, the termination fees for the Connect, max.mobil, Mobilkom and tele.ring mobile networks were set. The orders, which were each agreed upon by two parties to the proceedings, provide for a gradual reduction of termination fees for Connect and max.mobil. The mobile termination fees set by the Telekom-Control Commission in previous proceedings for Mobilkom and tele.ring were confirmed. All termination fees are quoted per minute exclusive value-added tax.

Access to customers is an essential facility which cannot be substituted, i.e. customers can only be reached through the mobile network they subscribe to. This can lead to monopoly-like profit-taking on the interconnection market, which triggered the procedures for these interconnection decisions. Because tele.ring, Connect and max.mobil do not have significant power on the interconnection market, it was necessary to set an appropriate fee for termination services. Otherwise it would have been necessary to require cost-related pricing structures. The appropriate fee is based on the theoretical market price for termination services in a competitive market. The Telekom-Control Commission came to the conclusion that this fee - analogous to the fee set for Mobilkom in November 1999 - is ATS 1.90 per minute. In its decision, the Telekom-Control Commission also took the principle of promoting market access for new enterprises into consideration by setting varying effective dates for the new termination fees. As a newcomer, tele.ring is not subject to this principle of uniform market price regulation.

The interconnection decisions made in July 2000 have prepared the stage for the reciprocal application of interconnection fees in mobile communications as well. In order to avoid disruptive intervention and to allow the network operators to adjust to the changes, the Telekom-Control Commission decided not to order immediate changes in the interconnection fees between max.mobil. and Connect. These fees will be reduced gradually, in accordance with regulatory practice to date.

Interconnection between max.mobil and UTA

The interconnection fees mandated between max.mobil and UTA call for a reduction of max.mobil's rate to ATS 2.20 per minute as of November 24, 1999, the date on which UTA submitted its application. A further reduction to ATS 1.90 was ordered starting August 1, 2000. This order will remain valid until June 30, 2001.

Interconnection between max.mobil and Telekom Austria

Analagous to the decision described above, this order calls for a reduction of max.mobil's termination fees to ATS 2.20 per minute as of March 1, 2000. As of August 1, 2000, the rate will be ATS 1.90 for termination services in the max.mobil network, and the order will remain effective until March 31, 2001.

Interconnection between max.mobil and Mobilkom

In this decision, max.mobil's termination fees were lowered to ATS 2.20 per minute from May 31, 2000 to July 31, 2000. From August 1, 2000 to December 31, 2000, the fee will be ATS 1.90 per minute. The time limit was mandated with an opening clause stating that the termination fee of ATS 1.90 per minute will apply to max.mobil beyond the end of the order‘s duration and that the two parties will be required to enter into negotiations. If the private negotiations between Mobilkom and max.mobil do not lead to an agreement, the Telekom-Control Commission will set new fees from January 1, 2001, provided that the parties notify the Commision of the negotiations‘ failure in due time.

Interconnection between Mobilkom and Connect

As the Telekom-Control Commission believes that Connect has grown beyond the status of a newcomer on the mobile communications market, Connect's termination fees were reduced to ATS 2.20 per minute, starting August 1, 2000. This order will remain in effect until December 31, 2000 and is likewise combined with an opening clause. Accordingly, the fee on both sides will be ATS 1.90 per minute as of January 1, 2001. If Connect and Mobilkom are not able to reach an agreement, the regulatory authority will also take action upon notification.

Interconnection between Mobilkom und tele.ring

For tele.ring termination services, a fee of ATS 2.70 per minute was ordered until December 31, 2000. The opening clause calls for the continued validity of the fees from January 1, 2001 onward. In the case that the negotiations fail, the regulatory authority has likewise granted the option of announcing the failure and the ensuing determination of fees from January 1, 2001. The Telekom-Control Commission justified this decision by pointing out that tele.ring is a newcomer and thus still in the process of establishing itself on the mobile communications market.