European Commission: FICORA must withdraw its plans to deregulate the wholesale markets for fixed voice call termination in Finland

The European Commission has ruled that the Finnish telecoms regulator (FICORA) must withdraw its plans to deregulate the wholesale markets for fixed voice call termination in Finland. Finland’s currently regulated fixed termination rates (FTRs) are the highest in the EU at 2.42 €-cents/min, compared to an average of 0.11 €-cents/min in all other EU member states which follow the approach recommended by the European Commission. The Commission has overruled FICORA’s proposal to leave unregulated the rates, which Finnish operators charge other operators for connecting calls to customers on their respective fixed networks. Termination markets are monopolies since only one operator can terminate a call to its subscribers. Since FTRs are ultimately included in prices paid by consumers, leaving FTRs unregulated in non-competitive markets implies the risk of excessive pricing both at wholesale and retail level.

In its veto decision adopted today, the European Commission considers that FICORA has failed to provide sufficient evidence that the market is effectively competitive and would therefore no longer warrant regulation. In order to provide such evidence, FICORA should have demonstrated that it would not be profitable for operators providing termination services to raise FTRs, for example if this would cause consumers to substitute their fixed connections for mobile ones. The Commission considers therefore that FICORA has not provided a thorough analysis of the competitive conditions prevailing on the market. .

In the absence of such evidence, the Commission considers that FICORA’s draft measure is not compatible with the principles and objectives of the EU telecoms rules which require Member States to promote competition, EU consumers’ interests, and the development of the Single Market. The Body of European Regulators for Electronic Communications (BEREC) fully supports the Commission’s position in this case.

European Commission Vice President Neelie Kroes stated: “I cannot allow regulation to be lifted from a market where each operator has a monopoly and where fixed termination tariffs are up to 60 times higher than in elsewhere in Europe Excessive pricing means unjustifiable expense for operators and for consumers in Finland, and in countries which do regulate fixed termination charges. Such an approach puts at risk the single telecommunications market.”

On 2 September 2013, the Commission received a notification from the Finnish regulatory authority (FICORA), concerning the markets for call termination on individual public telephone networks provided at a fixed location in Finland.

The Commission’s in-depth investigation began with a “second phase” procedure under Article 7 of the EU Telecoms Directive on 2 October 2013 and was closed today by a veto decision.

Article 7 of the Telecoms Framework Directive requires national telecoms regulators to notify the Commission, BEREC and telecoms regulators in other EU countries, of the measures they plan to introduce to solve market problems.

Where the Commission has concerns as to the compatibility of the proposals with EU law or considers that they may create barriers to the internal market, it can open an in-depth or “Phase II”, investigation, under the powers of Article 7 of the Framework Directive. It then has two months to discuss with the relevant regulator, in close cooperation with BEREC, how to amend its proposal in order to make it compliant with EU law. The Commission may, by the end of the extended investigation period, either lift its reservations or require the regulatory authority to withdraw the proposed measure, in which case the regulator concerned must undertake a new consultation process both at national and EU level.

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