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Cost-orientation of interconnection tariffs for call origination, termination and transit

 

The levels of interconnection tariffs call origination, termination and transit have a great impact on the new entrant’s decision and capacity to compete in the telephony market, as well as on the consumer behaviour, since interconnection costs form a significant share of the operator’s expenditures and directly influence the tariffs charged by the operators to their own customers. Therefore, the level of the interconnection tariff may represent a barrier for the subscribers who wish to make calls to other telephony networks. Interconnection tariffs above the costs distort competition, as they hinder the competitiveness of the offers for off-net calls, compared to the tariffs for on-net calls; furthermore, an excessive level of interconnection tariffs distorts the consumer behaviour, hampering communication between networks and influencing the users’ choices.
 
According to the new European regulatory framework, the cost-orientation of the interconnection tariffs for call origination, termination and transit represents one of the most important remedies to address competition problems.
 
In view of establishing and imposing adequate remedies on the specific relevant markets where ANCOM identified the existence of operators with significant market power (SMP), the ANCOM has acted in accordance with the provisions of Article 8(3) of the Government Ordinance no.34/2002, which stipulate that the obligation imposed by ANCOM should be “[…]based on the nature of the problem identified, proportionate and justified […]”.
 
Therefore, during the first round of market analyses (2002-2007), remedies regarding the cost-orientation of interconnection tariffs have been imposed on the following operators:
  • Romtelecom, for the interconnection services for the purpose of call origination, transit and termination, based on Decision no.147/2002, and respectively for the obligations regarding the cost-orientation of the services of call origination and transit;
  • Orange Romania and Vodafone Romania, for the interconnection services with the public mobile networks they operate, for the purpose of call termination at mobile locations, based on Decisions no.124/2003 and, respectively, 123/2003;
 
Starting 2007, anew round of market analyses corresponding to the call interconnection services on the public telephone networks has been initiated and, following the assessment of the competitive circumstances for the purpose of identifying the providers with significant market power, the regulatory measures have been reviewed (which involves, as the case may be, to uphold, withdraw, or amend existing obligations or impose new obligations).
 
Thus, as regards call termination services at fixed locations on the public telephone networks:
  • Romtelecom’s cost-orientation obligation has been upheld (Decision no.91/2012) + glidepath 2012 based on the results of the pure LRIC from other EU Member States
  • impose or, as the case may be, maintain the price control obligation (+ symmetry)for the alternative operators designated as having significant market power. The tariff has been established based on benchmark, the reference level being Romtelecom’s interconnection tariff, at regional level.
 
As regards the call termination services at mobile locations on the public telephone networks, the cost-orientation obligation:
  • has been upheld for the operators designated as having significant market power in the previous market analysis, namely: Orange Romania (Decision no.105/2012), Vodafone Romania (Decision no.109/2012), Cosmote Romanian Mobile Telecommunications (Decision no.104/2012), RCS & RDS (Decision no.106/2012) and Telemobil (Decision no.108/2012) ;
  • has been also imposed on Romtelecom (Decision no.107/2012), a new-entrant on the market after the completion of the previous market analysis. The operator was identified as having significant market power and was imposed tariffs symmetrical to those of the other operators;
 
As well, as regards the call origination services at fixed locations, and the services for national switched transit of calls, the cost-orientation obligation imposed on Romtelecom has been upheld (Decision no.1014/2009):
 

Cost-orientation of interconnection tariffs for leased lines – terminating segments

As a result of the first round of market analyses (2003), in its capacity as operator with significant market power, Romtelecom has been imposed a series of obligations as regards the provision of the services of leased lines - terminating segments, irrespective of the ensured transmission capacity, among which the obligation of price control by means of the retail-minus method (Decision no.1379/2003).

 
On the occasion of the second round of analyses on leased lines services markets, the relevant market has included terminating segments with the transmission capacity of up to and including 2 Mbps, Romtelecom further benefiting from the capacity as operator with significant power (Decision no. 6/2011). Romtelecom’s price control obligation has been upheld exclusively for the leased lines – terminating segments with transmission capacities of up to and including 2 Mbps, while the determination method has been changed (from retail-minus into LRAIC+ cost-orientation of the efficient service provision) and new tariff ceilings have been imposed (Decision no. 15/2011).
 
The regulated tariffs of the interconnection services for leased lines – terminating segments are available for consultation here.