Falling telecommunications prices

The cost of telephone calls in Europe looks set to fall as the European Commission takes action to bring down the price of the interconnection of fixed telecommunications networks. Interconnection charges are the prices that telephone companies charge each other for deliverin...

The cost of telephone calls in Europe looks set to fall as the European Commission takes action to bring down the price of the interconnection of fixed telecommunications networks.

Interconnection charges are the prices that telephone companies charge each other for delivering a telephone call when the call travels over more than one network. The European Commission has revised its Recommendation on best current practice, ruling that interconnection charges for 2000 should be eight per cent lower on average than in 1999.

Interconnection charges provided by incumbent fixed operators have to be cost-oriented according to Community law. Lower charges will ultimately filter down to the consumer in terms of lower call charges.

'During 1999, interconnection charges in the European Union have continued to fall and converge towards the levels recommended by the Commission,' said Erkki Liikanen, Commissioner for Enterprise and the Information Society.

'Telecommunications regulatory authorities in the Member States are acting effectively to monitor the interconnection charges of incumbent fixed network operators. Decreases in interconnection charges mean lower prices for customers, in particular for long distance and international telephone calls, and that is good for business users and for consumers.'

In a newly liberalised market, it is vital that new network operators are able to interconnect to the incumbents network to gain access to existing subscribers. Interconnection charges constitute one of the major items of expenditure for new entrants, up to 40 per cent of total costs.

In January 1998 the Commission first published a Recommendation on best current practice interconnection charges, providing guidance for network operators and national regulatory authorities on the most competitive prices prevailing in the Community.

The best current practice figures are derived from the interconnection charges in the three lowest-cost Member States.