Based on the decision of the President of the National Media and Infocommunications Authority, wholesale call termination rates applicable to mobile operators will decrease by 76 percent, from HUF 7.06 per minute to HUF 1.71 per minute, as of 1 April. This termination fee is the maximum amount the mobile operator of the dialling party may charge the mobile operator of the dialled party (if the two are not the same) for one minute of telephone call. In addition to the three operators currently present on the Hungarian market (Magyar Telekom Nyrt., Telenor Magyarország Zrt., Vodafone Mobil Távközlési Zrt.), the three new mobile phone operators with significant market power, as the decision specifies, (UPC Magyarország Telekommunikációs Kft., Netfone Telecom Távközlési Szolgáltató Kft., Tesco MBL Távközlési Zrt.) will also have to work with the reduced call termination rate. The three virtual operators have been able to become service providers of significant market power because they terminate the calls themselves. In addition to the reduced rate (a part of the cost basis), the operators are also required to comply with the principles of transparency, equal treatment, accounting separation, access and interconnection.

The second lowest call termination rate in the EU

Pursuant to other framework directives of the European Union, NMHH has regulated mobile call termination rates for years. The new call termination rate effective as of 1 April this year will significantly lower the approved expenses of service providers. Reduced wholesale termination rates may indirectly result in lower retail rates and may provide a significant boost to the spread of new, innovative retail tariff packages with unlimited airtime credit included in the monthly fee. With the introduction of the new rate, Hungary will have the second lowest mobile call termination rate in the European Union.

Background

In compliance with EU regulations, NMHH is required, at least once every three years, to review the regulatory environment of the mobile telephone market, including call termination rates. The last decision of the Authority on market no. 2 (“Voice call termination on individual mobile telephone networks”) was issued in 2011, when a two-phase change was implemented as of 1 January 2012 (a reduction from net HUF 11.86 per minute to HUF 9.46 per minute) and then as of 1 January 2013 (a reduction from net HUF 9.46 per minute to the current level of HUF 7.06 per minute). In December 2014, the Authority released its draft decision relevant to the termination rates for public consultation and, as required under EU law, also submitted the document to the European Commission prior to announcement to the operators. As the Commission has raised no objection to the decision, President of NMHH Monika Karas signed the document without any amendments.

Cost-based fee calculation

The final result of the cost-based calculation method is generated using the BU LRIC (Bottom Up Long Run Incremental Cost) model, a standard in international regulatory practice. This method calculates with the returns on and amortisation of investments, which means that it assigns significantly lower costs to networks implemented earlier. Ultimately, this is what creates the opportunity for the gradual reduction of fees.