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European Commission stops prices proposed for Polish mobile operator

European Commission stops prices proposed for Polish mobile operator

The European Commission has, in line with its powers under the 2009 Telecoms Directive, put a stop to Polish telecommunications regulator UKE’s intention to set mobile termination rates for the Polish operator AERO2. The case marks the first time the Commission has expressed an intention of using its new powers of vetoing proposed regulatory remedies.

The European Union’s Telecommunications Framework Directive requires telecommunications regulators of Member States to carry out analyses of a set of telecoms product and service markets which may need ex-ante (preliminary) regulation. National regulators must notify the European Commission of any remedies they plan on implementing in a market, with the remedies being a means of ensuring effective competition, while taking utmost account of Commission recommendations issued.

The EU Telecommunications Framework Directive was updated in 2009, with the new legislation providing the European Commission with increased powers in the remedy notification procedure. The Commission, pursuant to the new Article 7a, now has increased power over the remedies proposed by national regulators –  should the Commission (in cooperation with BEREC) consider a notified draft remedy to be an obstacle to the single, competitive EU telecoms market, it can veto the remedy and request that the regulator amend or withdraw it.

In line with its new powers in the so-called ‘Article 7’ notification procedure the European Commission has, on 17 November 2011, for the first time expressed and intention of  vetoing the remedies notified by an EU telecoms regulator. The regulator in question is the Polish national regulator UKE that planned to set mobile termination rates for AERO2, a Polish mobile operator.

Mobile termination rates (MTR) are the wholesale prices which telecoms operators charge each other for connecting incoming calls to subscribers using their networks and are ultimately included in phone call prices.

UKE planned to set AERO2’s termination rates without having conducted a detailed market analysis first, with the AERO2’s termination rates set at more than double the prices offered by its four main competitors. Moreover, the proposed termination rates do not take into account the Commission’s Termination Rates Recommendation.

With no justification for the proposed regulatory measure, the Commission has halted the proposed UKE regulatory remedies and will, in cooperation with BEREC and UKE, review the notified measures. Aphaia’s Chief Consultant Boštjan Makarovič comments: “Market analysis lies at the core of the EU regulatory system. Moreover, termination rates are very high on the Commission agenda. Therefore this Commission action is hardly surprising.”

The review of UKE proposed remedies will last up to 3 months, at the end of which the Commission may issue a recommendation asking the national regulator to amend or withdraw its planned remedy.

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