ART recommends reductions in the prices charged for calls to mobiles

Paris, 29 June 1999

Four months ago, ART organised a round table with the three mobile operators - France Télécom Mobiles, SFR, Bouygues Télécom - and France Télécom, to discuss the price of calls to mobiles, i.e. the retail price charged for calls from fixed telephones to mobile phones.

This is ART's assessment of the issue and recommendations, following those talks.

Background:

According to their licences, the three mobile telephone operators, rather than the fixed operators, are responsible for setting the retail price charged for calls from fixed telephones to mobile phones. This rule was adopted in 1991 to boost growth in the mobile telephone market. Today mobile operators make about one third of their turnover on revenue from incoming calls.

According the dispute settlement decision issued by ART on 1st March 1999, mobile operators are also responsible for setting the interconnection tariff that France Télécom has to pay for call termination on mobile networks.

The price for calls to mobiles in France, which has not changed for several years, is slightly higher than the European average, while the price for calls from mobiles is one of the lowest in Europe. Naturally the two are linked.

At the same time, international rerouting of calls from fixed phones to mobiles has developed fast. The rate paid to a mobile operator for international call termination is usually only about 30 centimes per minute, as it is based on the traditional system whereby France Télécom receives a settlement rate for calls from abroad, regardless of whether they are to fixed or mobile phones. This rate is evidently much lower than the real cost to the mobile operator. Some fixed telephone operators are thus taking advantage of this loophole in the system, by rerouting calls from fixed telephones in France via the international network for delivery on mobile phones in France.

The aims underlying ART's decision on the issue:

Bring down the prices charged for calls to mobiles, in the interests of consumers.

Combat international rerouting, which is artificial, and economically unhealthy.

Safeguard mobile operators' economic equilibrium, which is still fragile.

Take into account the differences, particularly in structure and life-span, between the three mobile operators, in order to maintain fair competition conditions.

ART has thus decided:

to ask mobile operators to begin to lower their retail prices. The operators are left to decide the precise arrangements and timescale for the reductions. ART recommends a cut of about 20 % between now and 1st October. The situation will be reviewed with the operators on 31 March 2000, in order to make arrangements for further reductions the following summer.

to recommend, for call termination rates:

- right away,

- a considerable increase in the rates charged for delivering international calls to mobiles, in order to combat international rerouting;

- a cut in the payments made respectively by France Télécom and mobile operators, for national call termination, in proportion with retail price reductions;

- later,

- the realignment of international call termination rates with national call termination rates.

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