Popoviciu’s statement comes after market regulator ANCOM started talks with local mobile telephony operators on the most important topic for the EUR3.5 billion industry: the calendar of interconnection charge reduction so as to reflect the costs companies incur when their customers get a call from other networks.
Estimates provided by the Cosmote, Orange and Vodafone officials, who are adamant supporters of a slow reduction of interconnection charges, show the operators would lose EUR250 million in revenue, in case of a steep cut of interconnection fees, which would render them unable to invest in development of new networks, 4G included.
Only the top three competitors in this business, which have over 20 million customers and about EUR2 billion in annual revenue together, have voiced their opinions on the subject so far and this is the first time RCS&RDS has publicly spoken about it.
“The large operators on the market have had exaggerated revenue for 15 years as far as we are concerned. We believe the investments they made in building their networks have already been recouped. It’s their problem how they do their sums next,” Popoviciu says.
“Interconnection charges have to be based on costs and be as low as possible; this is what we ask that would benefit the end user. We want this major barrier hindering user migration between networks gone,” he added.
“That revenue (the EUR250 million i.e.) is, as we see it, unjustifiably paid for the smaller operators like us and by the end users (…). These charges have to be based on costs for cost and competition reasons. We don’t see why the other operators are still saying they will lose some revenue they’ve known they would for years since it is, in our opinion, paid for by us and our customers,” Popoviciu said.
How low could interconnection fees go
The reduction of the interconnection charges mainly serves to dilute the competitive edge that comes from the high number of customers, because once able to call other networks at several eurocents per minute, they might decide to switch operators. This is why customers are now choosing their mobile telephony provider by looking at what network the numbers they call most often belong to first.
Interconnection fees have already gone down 30% this year to 3.07 eurocents per minute. Major operators’ worst nightmare, however, is that ANCOM might decide to further cut interconnection fees to 1 eurocent/minute.
RCS&RDS, a company established by Romanian entrepreneur Zoltan Teszari in Oradea (NW Romania) almost 20 years ago has turned into a giant with about EUR500 million revenue a year on its home market alone. Most of its revenue comes from the over 3 million TV service subscribers and over 1 million fixed Internet users.
RCS&RDS launched mobile telephony services in October 2007 and has the lowest number of customers on the market, which is still more than one million, according to the data it released at the end of 2009. It has not provided any update on the numbers ever since.
Competition on the local mobile telephony market is not strong enough yet, considering 90% of the calls are made in the same network and users carry two phones with them, to save money by paying same network call rates, Valentin Popoviciu says.
Communications market regulator data show that more than 85% of the calls made from cell phones in Romania were in the same network last year compared with 83% in 2009.
Talks about call termination fees are still in their early stages considering no model has been devised yet to calculate costs that can then be used to set termination fees. Once a model decided by talks with the operators, it will be made available for public consultation and then the charges will be suggested, which may take months. The documents created in the process will then have to be submitted to the European Commission for approval. ANCOM has not made any such document available for public consultation so far but is due to begin by yearend.
(English version by Loredana Fratila-Cristescu)