TKK sets mobile termination fees: Gradual reduction until December 2006

Press release dated 21 December 2005

In its session on December 19, 2005, the Telekom-Control Commission (TKK) set the mobile termination fees for all five of Austria's mobile network operators. This TKK decision provides for a gradual reduction of mobile termination fees, which will result in a uniform fee among all mobile network operators by December 31, 2008. By that time, all operators will have reached the "uniform market price".

"The Telekom-Control Commission considers a period of approximately three years from the date of this decision to be appropriate, as operators entering the market later will also be able to reach the minimum optimal company size required to provide services efficiently," comments Georg Serentschy, Managing Director at RTR, on the TKK decision. "In addition, the time span until the end of 2008 will enable the operators which are directly affected to make internal adaptations and business plans based on declining termination fees. This will give the operators a degree of certainty in planning," says Serentschy.

Decision on mobile termination includes seven procedures

With decisions issued on October 27, 2004, the TKK determined that each of Austria's mobile network operators (Mobilkom Austria AG & Co KG, T-Mobile Austria GmbH, ONE GmbH, tele.ring Telekom Service GmbH and Hutchison 3G Austria GmbH) possesses significant market power on its individual mobile termination market. Consequently, one of the obligations imposed on the operators was to charge a fee for termination in their public mobile telephone networks based on the costs to an efficient operator.

As the operators were unable to reach private agreements on the amounts of interconnection fees, the TKK was called in by tele.ring, Hutchison and UPC Telekabel. Subsequently, seven dispute resolution procedures were carried out.

In the expert opinions commissioned in this process, data was collected on the individual operators' costs for the efficient provision of mobile termination services. In this context, it turned out that Mobilkom – the company which provides mobile termination services at the lowest price – represents the benchmark for the costs of an efficient operator as defined in the imposed obligations. As a result, the termination fees of all other mobile network operators had to be based on this "target value" (6.79 euro cents excluding VAT).

Comments and opinions also considered in definition of fees

In the course of the consultation and coordination procedures for the draft measure, numerous interested parties and institutions submitted their input. Among others, the European Commission submitted comments on the TKK's draft measure in November 2005, generally stating that the TKK should substantially shorten the duration of the glide path. According to the European Commission, this will ensure that the remedies imposed are effective and appropriate to address the competitive problems identified. The TKK believes that the concerns of the European Commission and the additional input from numerous parties have been addressed sufficiently with the adaptations made, in particular the shortening of the glide path from the end of 2011 to the end of 2008.