The provision of call termination on individual public telephone networks at a fixed location in Malta
The MCA is hereby presenting its final decision on the markets for wholesale voice call termination on individual public telephone networks provided at a fixed location in Malta, in accordance with the EU regulatory framework of electronic communications networks and services.
The MCA has carried out a national consultation process during the period running from the 1st September 2015 to the 9th October 2015. The MCA received one response from Vodafone which has been taken into account in this final decision.
Pursuant to Regulation 7 of the Electronic Communications Networks and Services Regulations (ECNSR), the MCA is required to notify its proposed decision to the EU Commission and the body of European Regulators for Electronic Communications (BEREC) which may make comments on notified draft measures. To this effect, the MCA notified its draft decision on 3rd November 2015.
During the Phase 1 evaluation, on 11th November 2015, the Commission requested additional information to which the MCA responded to such request on 16th November 2015. On the basis of the additional information provided by the MCA and the notification document, on 30th November 2015, the Commission issued its comments letter.
In this letter the Commission agreed with the conclusions in the draft decision and had no further comments to make.
The MCA identifies six relevant wholesale markets for the provision of fixed voice call termination on individual public telephone networks in Malta. These are:
- a market for the provision of fixed voice call termination services by GO;
- market for the provision of fixed voice call termination services by Melita;
- a market for the provision of fixed voice call termination services by Vodafone;
- a market for the provision of fixed voice call termination services by SIS;
- a market for the provision of fixed voice call termination services by Ozone; and
- a market for the provision of fixed voice call termination services by Vanilla Telecoms.
Each relevant market includes call termination services provided by each fixed network operator (FNO) to third party operators and as well as self-supplied termination.
The geographical scope of each relevant market corresponds to the physical coverage of the fixed network operator characterising the market.
Based on the findings and discussion presented in the market analysis, the MCA concludes that the wholesale markets under consideration are not competitive and will not retract from this position during the timeframe of this review.
This conclusion is supported by a number of factors, namely that:
- Each FNO holds a 100% share of the market in terms of voice call traffic terminating on its own network, irrespective of its size and technological platform.
- Each FNO can act independently of retail customers and other network operators in the setting of fixed termination charges. Due to the CPP mechanism, retail customers are typically insensitive or unaware of fixed termination charges. In addition, network operators have no alternative for terminating a call other than the FNO to which the called number belongs.
- In the absence of regulation, FNOs have a strong incentive to price discriminate when charging for their voice call termination services and thus foreclose markets.
- In the absence of regulation, FNOs are likely to increase their fixed termination charges, thereby increasing the risk of price distortions.
- In a scenario where FNOs can freely set high termination charges, the scope for price competition is reduced to the detriment of retail customers.
In view of all this the MCA therefore considers that all FNOs hold SMP in their respective wholesale fixed termination market.
With reference to the evidence presented in the market analysis and after having identified the potential competition problems that may arise in the wholesale markets under investigation the MCA considers that ex ante regulatory intervention is required. To this effect, the MCA is mandating a number of obligations on SMP operators.
The MCA is to impose the following regulatory obligations on all FNOs designated with SMP in this market review:
- access to/and use of specific facilities;
- non-discrimination;
- transparency; and
- price control.
In addition the MCA is also imposing the cost accounting obligation on GO and Melita.
However, the MCA shall be withdrawing the accounting separation obligation from GO and Melita to the extent of the accounting separation required on this particular market i.e. call termination on public telephone networks at a fixed location.
All remedial action is based on the nature of the competition problems that have been identified in this market review. The MCA thus believes that these regulatory obligations are the most appropriate in the current circumstances and timeframe of this review. Each obligation is also considered to be proportionate and justified in light of the objectives set out in Article 4 of the Electronic Communications (Regulation) Act.
MCA Reference: MCA/D/15-2442
Regulatory Type: \N
Consultation: MCA/C/15-2367
Attachments: