EU Commission Opens Investigation into German Fixed and Mobile Termination Rates

On 21 November 2014, the European Commission opened Phase II investigations into the mobile termination rates plan of German regulator Federal Network Agency (FNA) under Art 7 of the Telecoms Framework Directive. This follows opening of investigations of the fixed termination rates plan of the FNO on 7 November 2014. The Commission had asked the FNA to lower these rates twice, once in 2013 (IP/13/612) and again in April of this year (IP/14/385).

Termination rates, i.e. the fees that are charged among network operators for delivering calls to recipients within operators' own networks, are subject to national regulation. National regulators are obliged, however, to notify the Commission, the BEREC and other Member States’ regulators of their draft decision to ensure consistent regulatory practice in the EU in accordance with the so-called Article 7 procedure.

The FNA’s proposal on fixed termination rates that would apply from December 2014 does not follow the Commission’s recommended approach for calculation (“pure BU-LRIC” vs. “LRIC plus”). It would allow German incumbent Deutsche Telekom AG (DTAG) to charge its competitors with prices still more than twice as high as the European average. The Commission is concerned that these costs would be passed on to consumers.

The current investigations are another step in an escalating tug of war between the two regulatory bodies and comes after the European Commission already requested the FNA to amend or withdraw its initial fixed termination rates plan in August 2013 (IP/13/766). The request of last year also followed a three month investigation and contained a recommendation on how to calculate the fees. However, the Commission stated that the revised proposal was still not satisfactory.

The FNA already stated they would stick to their method for calculating. A spokesman of FNA said, according to press reports, the Commission had no veto right over this decision. If an agreement will not be reached within the investigations period of three months the Commission could demand that the FNA withdraws or amends the proposal. And if the FNA will still refuse to do so the Commission could also take them to Court.