Cost-orientation and fees
If a lack of efficient competition may lead to the SMP operator applying unjustifiably high rates or a price squeeze, the President may, pursuant to Article 108 of the Electronic Communications Act, adopt a decision imposing certain cost orientation and rate controllability obligations concerning specific interconnection and access services.
The cost orientation and rate controllability obligation enables the appropriate handling of such obstacles to competition as, for example, price discrimination, excessive pricing, price squeeze etc.
The essence of the regulatory function of this obligation is that the SMP operator should use a cost-based (competitive) price level for its regulated services, with the proviso that they must provide these at rates calculated following the cost calculation methodology defined in the decision.
This regulatory instrument may entail the obligation of applying different cost calculation and rate-setting methods, in the course of which a variety of pricing methods may be used (e.g. retail minus (RM) method, FDC method, LRIC method etc.).
The law also authorizes the President to determine the ratio of the consideration for network services to the subscription charge or to set the network service charge.
The use of cost-based rates is inspected in procedures conducted by the President with the aim of approving the reference offers, in procedures for the approval of the cost-based rates, under a general official surveillance proceeding or a market surveillance proceeding.