Latvian regulator works against consumer interest

  • 2012-08-14

RIGA - The European Commission has expressed serious doubts about a new proposal from the Latvian Public Utilities Commission (SPRK) regarding fixed termination rates, which would negatively affect consumers in Latvia by keeping rates at excessively high levels, reports LETA.

Termination rates are the rates telecoms networks charge each other to deliver calls between networks, and each operator has market power over access to customers on its own network. These costs are ultimately included in call prices paid by consumers and businesses.

SPRK proposed to apply very high fixed termination rates, 0.29 eurocents per call and 0.26 eurocents per minute, from April 1, 2013 whilst the same rates can be much lower in other European member states (e.g. 0.08 eurocents per minute in France). Such level of rates is not in line with the Commission’s 2009 Termination Rates Recommendation under the EU telecoms rules. The methodology applied by SPRK on fixed termination rates does not ensure that these rates are set on the basis of the costs of an efficient operator and, therefore, they result in rates which are too high by EU standards.

European Commission Vice President Neelie Kroes said: “I am determined to ensure that the regulated termination rates, including the fixed ones, are brought down to the costs of efficient operators in all member states without any unnecessary delay.”

In a letter sent to SPRK on Aug. 14, the Commission explains that the new rates in this proposal do not comply with the principles and objectives of EU telecoms rules, which require member states to promote competition and the interests of consumers in the EU, as well as the development of the Internal Market.

This is the second time that the Commission has used its new powers regarding national remedies under Article 7a of the Telecoms Directive in Latvia. The procedure must be concluded within three months.