Mobile call termination charges to be cut from 1 January

With this decision, the Board consolidated its 2006 decision, according to which present termination charges will fall unvaryingly to HUF 16.84 on 1 January 2009.

Currently, the three service providers levy different termination charges. HUF 19.75 per minute is charged for the termination of calls made from an external network to the network of Magyar Telekom, and HUF 20.29 and HUF 20.99 are billed in Pannon's and Vodafone's network for such service, respectively.

The decrease in termination charges will allow the retail prices of fixedline and mobile calls directed to (terminated in) mobile networks to be reduced further.

Termination charges will drop unvaryingly to HUF 14.13 on 1 January 2010 to reach the cost-based charge of HUF 11.86 on 1 December 2010, a charge determined by the Board on the basis of the BU LRIC (Bottom Up Long Run Incremental Cost) model which produced positive results in international regulatory practice.

According to the decision, by December 2010 the wholesale charge for the termination of calls to mobile networks will fall by approximately 40 percent compared to current charges, with the termination charges of the three Hungarian mobile operators already having been cut by approximately 30 percent over the preceding three years.

Changes in termination charges from May 2005 to December 2010:

Background

Call termination is a form of network service whereby calls are transmitted from the interconnection point to the dialled subscriber's network termination point. Telecommunications service providers pay one another for the use of the other service provider's network. The termination charge is paid by the service provider from the network of which the call is originated to the service provider to the network of which the call is directed.

The termination charges of Hungarian mobile operators were as high as HUF 38 per minute at the end of 2002. The termination charge of Magyar Telekom (called Westel at the time) was the first to be brought under regulation and thus the price charged for call termination in its network fell to HUF 33.37 per minute by the end of 2003. Charges decreased to HUF 36.15 per minute in the network of the then unregulated Pannon, and the similarly unregulated Vodafone levied HUF 38.84 per minute in its network. With one of its first decisions to be made, the NHH, which was established in early 2004, reduced the termination charge of Pannon by 9.2 percent and that of Magyar Telekom/T-Mobile by 8.7 percent, making the difference between the two operators' termination charges to fall below 5 percent. At the end of 2004, the still unregulated Vodafone's average termination charge was HUF 39.05 per minute, while Pannon charged HUF 32.85 per minute and T-Mobile HUF 31 per minute.

During the first market evaluation the Board of the NHH classified all the three Hungarian mobile operators as operators with significant market power, and thus Vodafone was also brought under regulation. The Board ordered all the three service providers to reduce their termination charges from 25 May 2005. With this step the Board narrowed the widest gap between the termination charges of the three operators to 20 percent, and this decision was the first to state that the termination charges set were to apply to all calls incoming to the network, be they made from a landline or a mobile network.

In 2005 the Board of the NHH set the average charges based on EU comparisons, and then in 2006 after a second market analysis, it applied a cost model and made a decision planning ahead for three years for the first time. The NHH's decision in 2006 made the market predictable and transparent, and required that by 1 January 2009 all the three mobile operators charge HUF 16.84 for call termination. With its present draft decision the NHH ensures calculable and transparent market conditions also for the subsequent years and, at the same time, maintains symmetry between the termination charges of the three mobile operators.