EU tells Ofcom it set wholesale prices too high
The European Commission today warned Britain it was setting wholesale tariffs too high and risked blocking a trend toward lower consumer prices.
The EU executive – which oversees telecoms rules aiming to open up the market - said it was asking the British regulator Ofcom to reconsider its valuations, telling it to exclude the “inflated” costs of buying licences for third-generation mobile phones.
The current plans were likely to hinder the market’s move toward lower prices, it said.
The EU criticisms centre on the wholesale tariffs the five British mobile operators charge for terminating calls to customers.
Ofcom put forward its plan for “cost-orientated tariffs” in September that would reduce mobile termination rates to target prices over three years, starting April 2007.
But EU officials claim Ofcom’s planned tariffs are “higher than necessary” because it counted in the cost of 3G spectrum that risked overestimating the costs.
“The Commission believes that such costs should not be calculated on the basis of prices paid during the spectrum auctions, which are in today’s context inflated,” said EU telecoms chief Viviane Reding.
