ANACOM sets out 43% reduction in mobile termination prices

ANACOM has approved a draft decision requiring mobile operators to reduce the price of mobile call terminations to 0.43 eurocents per minute, in line with the wholesale price charged by operators. This new price, which comes into force on 1 July 2018, represents a reduction of 43% over the current price - 0.75 eurocents / minute.

Reducing mobile termination rates eases competition distortions which undermine the market and are detrimental to smaller operators in particular: the existence of termination prices in excess of costs, coupled with marked differences between retail prices charged within and outside the network of each operator, reinforces the network effect and generates an imbalance in traffic.  This hampers smaller operators which tend to deliver a much larger volume of traffic onto the networks of the largest operators, thereby incurring higher costs. Cutting termination prices will provide for a reduction in the financial burden faced by these smaller operators, who will therefore be able to enhance their competitive capacity and increase their appeal in the market, resulting in benefits for consumers in general.

Lower mobile termination rates allow tariffs which do not differentiate prices according to destination network, or which include free calls to all networks; this contributes to the elimination of this network effect, since calls to networks other than the operator’s own network are no longer penalised.

ANACOM's decision to intervene in mobile termination rates stems from the fact that operators have significant market power and have never promoted voluntary reductions in these prices. The current prices were determined by ANACOM in 2015 and updated in 2016 and 2017.

In the draft decision now approved, and with the aim of promoting regulatory certainty, ANACOM is already identifying a maximum price of the mobile termination wholesale service for 2019 and 2020, updated based on current and forecast inflation. As such, from 1 July 2019, the price will be 0.41 eurocents (updated according to inflation data), and from 1 July 2020 the price will be 0.36 eurocents (also updated according to inflation data). In all cases billing is per second from the first second.

This draft decision is now submitted to a prior hearing of interested parties and to public consultation for a period of 30 working days.