ANRC communicated to Romtelecom its approval of the request for rebalancing the retail tariffs of the fixed telephone services, to come into force on August 15, 2006. On April 14, 2006, Romtelecom submitted to ANRC for approval a proposal for revising the structure of the monthly subscriptions and for rebalancing the current retail tariffs by increasing monthly rental tariffs, while reducing the tariffs for local, long-distance and fixed-to-mobile calls.
Upon analysing the support documents and the audit reports submitted by Romtelecom, ANRC found the tariff rebalancing request to be reasonable, since it reduces the difference between Romtelecom’s operational costs and the tariffs charged. Furthermore, ANRC considers that Romtelecom’s proposals for reducing the tariffs for calls, extending ”off-peak” hours and increasing the value of the minutes included in the rental credit, together with the significant rise of the alternative operators’ market share, are strong signals that competition becomes more intense, which justifies the approval of a new rebalancing phase.
Here are the main changes of Romtelecom’s tariffs:
· increase of the monthly rental fees by 25.4%, on average, and, as a counterbalance:
– reduction of the tariffs for local calls on Romtelecom’s network by 13.3%, on average;
– reduction of the tariffs for long-distance calls on Romtelecom’s network by 6.4%, on average;
– reduction of the tariffs for fixed-to-mobile calls by 3.6%, on average;
– reduction of the tariffs for international calls, for business users, by 10.8%, on average;
– reduction of the tariffs for international calls, for residential users, by 1.3%, on average.
Tariff rebalancing is a necessary process, inherent to the telephony markets that make the transition from monopoly to competition, and it is required by both the Romanian law and the European Commission. Rebalancing means cost-orienting the tariffs charged for each service, by increasing monthly rental fees and cutting down the tariffs for calls.
On monopoly markets, rental fees were set below costs, in order to attract subscribers to the network, whereas losses were compensated by charging tariffs above costs for other services (long-distance and international calls). Continuing such practices in a liberalised market would hinder competition – as alternative operators could not offer line rental at competitive tariffs – and would encumber Romtelecom’s development since this company would not be able to recover its costs. Fostering a free market economy requires transition from a tariff system based on cross-subsidization to a tariff system that reflects costs.