28.10.2005 On Thursday, October 27, 2005, ANRC imposed Romtelecom the obligation to reduce its interconnection tariffs, based on a two-step adjustment schedule, January 1, 2006 and January 1, 2007. By the end of this transition period, the interconnection tariffs will have diminished – on average* – by: – 16.0% for local interconnection; – 51.5% for distance interconnection; – 55.8% for long-distance interconnection. The off-peak tariff for long-distance interconnection registered the most considerable reduction: 69.8%, whereas the peak-hour tariff for local interconnection underwent the smallest reduction: 11.3%. „Interconnection tariffs are the cornerstone of competition,” the ANRC President, Mr. Dan Cristian Georgescu, declared during the press conference held today, October 28. He pointed out that: „The cost-oriented interconnection tariffs foster the development of competition on the market of telephone services. Thus, the Romanian users will have the possibility to actually choose from a series of telephony offers – this is the only mechanism which, consistent with the principles of a functioning market economy, could drive to lower tariffs and to higher service quality and diversity. This reduction of the interconnection tariffs eventually results in cheaper calls, increased traffic and, consequently, in a larger number of fixed telephony subscribers.” In the process of cost-orientation of the interconnection tariffs, ANRC developed – assisted by a consortium of specialised consultants – a cost calculation model according to the latest sectorial regulatory principles and practices in the world. The principles on which this calculation model was based have been submitted to detailed consultation throughout the year 2003, and subsequently, in 2004 and 2005, the model was further developed and adjusted with the information provided by Romtelecom during a comprehensive process of reconciliation. ANRC conducted detailed consultations with Romtelecom, each party being assisted by its consultants, and eventually called for a public consultation open to all the industry representatives. In the evaluation and elaboration of the calculation model regarding the Romtelecom costs, ANRC had a close insight of the conditions on the Romanian market, taking into account both data collected from the market and data provided by Romtelecom. Moreover, ANRC took into consideration the arguments regarding the network configuration and repeatedly adjusted the model structure, as appropriate. „We consider that the new interconnection tariffs will simultaneously meet two requirements: stimulate competition and allow Romtelecom a reasonable rate of return on investments”, Mr. Dan Georgescu declared. The interconnection tariffs of the dominant operators in most European countries (Austria, the Czech Republic, Denmark, Estonia, Ireland, Great Britain, Netherlands, Poland, Hungary, etc.) were also cost-oriented using LRIC cost calculation models similar to that deployed by ANRC. Additional Information In users’ terms, interconnection means the possibility to call other networks’ subscribers (call termination) or the possibility to subscribe to one provider for access services and to another provider for call services (call origination). As for the providers, interconnection is a service through which they can offer their own subscribers the possibility to call other networks’ subscribers. The tariffs of the two interconnection services (termination and origination) are equal and represent the price paid by the telephony provider to the operator whose network he needs to interconnect with, for the transportation of its own users’ calls performed through the latter’s network. The level of the interconnection tariff influences to a great extent the providers’ decision and capacity to compete on the telephony market, since high interconnection tariffs may raise obstacles for those subscribers who want to call somebody outside their network. Such users would not subscribe to an operator that provides expensive calls to the major telephone networks. A market without effective competition, such as the market of access to fixed public telephone networks for the purpose of call origination, termination and transit, would not provide the competitive environment that drives to an effective decrease of the tariffs. The enforcement of the interconnection tariffs proposed by ANRC will contribute to the development of a competitive market, as the alternative providers are able to offer services at tariffs that may compete with those of Romtelecom, to the benefit of the end-users. *Average reduction – the cummulated effect of reducing the tariffs during peak hours and off-peak hours, considering the volume of the Romtelecom traffic within these intervals
ANRC Reduces the Interconnection Tariffs of Romtelecom
28 October 2005