Summary

Facts

Xfera is a new UMTS mobile operator and Telefónica Móviles (TME) and Orange are other mobile operators that offer services in Spain. Telefónica de España (TESAU) is the fixed telephony incumbent. Given that Xfera is a new operator, there is no agreement that regulates the termination charge on Xfera´s network. Operators could not agree on either the initial level of the termination charge, or on the adjustment formula for subsequent years. Once the negotiation period among parties came to an end without agreement being reached, TME requested the intervention of the regulator (CMT). A similar situation took place in the negotiations with TESAU and Orange.

Decision

The CMT concluded that an average charge of 0,170000 Euros per minute is proportional. Furthermore, until the CMT establishes new price regulations for Xfera, its average termination charges will maintain a 48,82% differential with respect to the weighted average of termination charges of regulated operators.

Reasoning

Firstly, TESAU, TME and Orange agreed to set (at that time) a higher mobile termination charge compared to the charges of the other three mobile operators. Secondly, Xfera is not subject to regulatory intervention since it has not been designated as an operator with significant market power. The charges should be set taking into account the freedom Xfera has to establish its charges and complying with the principles of proportionality, transparency, objectivity and non-discrimination. In this context, international benchmarking is a suitable alternative to establish the charge that will resolve the dispute.

Taking into account benchmarking with countries that have similar networks to that of Xfera, the CMT concluded that the charges proposed by Xfera were in line with the charges applied in those countries. Although 3G operators launched commercial services before Xfera and have a greater market share, most of them continue applying the charges initially established. Considering the network deployment of Xfera, the recent service launch, and its reduced market share, it was not appropriate to set a charge similar to those of other mobile operators in Spain. Furthermore, spectrum licences are different, since Xfera only has rights for UMTS while TME, Vodafone and Orange have rights for GSM 900 MHz, DCS 1800 MHz and UMTS. In addition, given Xfera’s scant number of clients , the volume of traffic is reduced, resulting in higher unit costs compared to those of other mobile operators in the market.