ANACOM orders 35% cut in mobile termination rates

ANACOM has ordered mobile operators in Portugal to cut the price of terminating calls on mobile networks to 0.85 eurocents per minute - a reduction  of 35% versus the price they were charging at the end of 2012 (1.27 eurocents).

This reduction in mobile termination rates is a very significant step; it will help remedy distortions in competition which are adversely affecting the market and hampering its smaller operators in particular.

In fact, marked differences between the prices charged for calls made within and outside an operator's network, associated with termination rates set in excess of costs, reinforce the network effect and generate traffic imbalances.  This harms smaller operators because they deliver much more traffic to the networks of larger operators, incurring higher costs. A cut in termination rate means that smaller operators can reduce their expenses, giving them an opportunity to increase competitiveness and make themselves more attractive to customers. This brings overall benefits to consumers in general.

The cut in mobile termination rates enables the introduction of tariffs which have the same price regardless of the destination network or which include free calls to all networks. Since calls made to networks other than the network of the customer's operator will no longer be penalised, this helps eliminate the network effect.

ANACOM's decision to intervene with regard to mobile termination rates stems from the fact that the operators, assessed as holding significant market power, have failed to undertake any price reduction on a voluntary basis - i.e. there will be no decrease in prices without ANACOM intervening to impose one.

Currently, the prices in force (1.27 eurocents per minute) mean that mobile termination rates in Portugal are the highest out of all the 20 European Union countries that have termination rates oriented to the costs of an efficient operator ("pure" LRIC prices). With the decrease now stipulated by ANACOM, to 0.83 eurocents, prices in Portugal will be the 8th lowest.

The draft decision enacting this reduction has been notified to the European Commission, which saw fit not to comment.

As such, the new wholesale mobile termination rates will take effect within 10 working days following adoption of this decision and will be updated in 2016 and in 2017.