Commission backs 8&percent; cut in telecoms link-up fees

Date: 30/07/1998

By Peter Chapman

THE European Commission has issued new guidelines for the rates telecoms operators should charge for carrying calls by rivals' customers on their networks.

Officials said the bench-mark interconnection rates, which are designed to shame high-charging operators into reducing their fees, had been reduced on average by 8&percent;.

“What this report does is update last year's recommendations. They are moving slightly downwards by about 8&percent;,” said one official.

The move follows a general fall in rates, and a trend among high-charging former monopoly operators, including those in Austria, Sweden and Belgium, to bring their fees closer to the acceptable rate.

“What we have witnessed has been a general downward move. The most expensive member states have come into line with the bench-mark rates,” said the official, although he added that there were still large variations in charges between operators.

EU telecoms directives call on big telecoms operators to levy interconnection fees which relate to the cost of offering the service. The Commission launched its interconnection rates bench-marking exercise last November amid fears that old monopoly operators in some countries lacked the accounting expertise in the short term to publish their own cost-based charges.

Interconnection fees are one of the biggest costs faced by new market entrants in the telecoms sector. Some of them find that up to 40&percent; of their overheads relate to interconnection payments to established operators.

The new guidelines focus on the 'best current practice' prices paid by operators for terminating calls at peak times on established fixed-phone networks at local, urban and national levels.

They will be valid until the end of 1999, when the Commission will release another update. Telecoms lobby the European Public Telecom-munications Network Operators Association (ETNO) said the fall showed that market forces were beginning to take hold.

“ETNO remains doubtful about the value of cross-border comparison in this domain. However, the new Commission paper does show that market forces are beginning to bite,” said ETNO spokesman Neil Gibbs. “This is good news because sector-specific regulation of telecoms can only be a temporary substitute for market forces.”

Others within the industry, however, argue that the Commission should have gone lower than the decrease that figures in the new guidelines. They complain that interconnection rates in Europe are up to five times higher than comparable charges in the US.