Background
Mobile termination rates (MTRs) are the fees charged by mobile operators to connect a phone call originating from a different network. Setting regulated MTRs continues to be a focus of regulators in both high- and low-income countries, and many different approaches have been developed to calculate appropriate termination charges.
Regulators have generally concluded that the provision of call termination services on an individual mobile network is, in effect, a monopoly. Therefore, with each mobile operator enjoying significant market power, regulators have developed various regulations and the most notable is the requirement to set cost-oriented prices for call termination.
Debate
How should an appropriate regulated rate for call termination be calculated?
Is the drive towards ever-lower mobile termination rates a productive and appropriate activity for regulators?
Once termination rates have fallen below a certain threshold, is continued regulation productive?
What is the long-term role of regulated termination rates in an all-IP environment?
Industry position
Regulated mobile termination rates should accurately reflect the costs of providing termination services.
Evidence suggests that reductions in MTRs are not beneficial after a certain point. The setting of regulated MTRs is complex and requires a detailed cost analysis, as well as careful consideration of its impact on consumer prices and, more broadly, on competition.
MTRs are wholesale rates, regulated in many countries where a schedule of annual rate changes has been established and factored into mobile operators’ business models. Unsignalled, unanticipated alterations to these rates have a negative impact on investor confidence.
The GSMA believes the setting of MTRs is best done at a national level where local market differences can be properly reflected in the cost analysis. Therefore, extraterritorial intervention is not appropriate.