Michael Minges Senior Market Analyst
ENSURING TELECOMMUNICATIONS SUCCESS AROUND THE WORLD
Mobile termination rates in Latin America & the Caribbean
Mobile Termination Rates (MTRs) • Wholesale price to terminate a call from another mobile or fixed network in a mobile network • Mainly relevant with “Calling Party Pays” where the termination charge is established by the network being called and paid by the network making the call • In general, charged on a per minute basis
Reasons for regulating MTRs • Termination in each mobile network is a monopoly • World Trade Organization (WTO): Reference Document • Reduce anti-competitive behavior and other market distortions
European Union • Identifies markets for ex-ante regulation • Applies 3 criteria: – Significant entry barriers – Markets whose structure will not lead to effective competition within relevant time frame – Application of competition laws are not enough to solve market failures
• One retail market and six wholesale markets have exante regulation including wholesale market #7: Termination of voice calls on individual mobile networks
WTO: Reference Document • Interconnection based on costs that are transparent and reasonable • Public availability of interconnection negotiation proceedings • Transparency of interconnection agreements • Major providers to make publicly available interconnect agreements or a reference interconnect offer
Evolution of cost models for MTRs
Use of current costs (LRIC)
Benchmark, TopDown, Bottom-Up
Use of current costs (FAC-CCA)
Benchmark Top-Down
Use of historical costs (FAC-HCC)
Benchmark
Tariff Cap
Negotiation
Level of Model Evolution
Source of Data
Increase in Competition Adapted from: Centro de Modelamiento Matem谩tico, Universidad de Chile. Reporte Preparado para la Comisi贸n de Regulaci贸n de Telecomunicaciones de Colombia. Mayo 2007.
Latest recommendation European Union • • • • •
Efficient operator Implies symmetric MTRs Current costs, “bottom-up” using LRIC Efficient technology: NGN & 2G/3G Only costs that would be avoided if voice termination for others was not provided
COMMISSION RECOMMENDATION of 7 May 2009 on the Regulatory Treatment of Fixed and Mobile Termination Rates in the EU (2009/396/EC)
12 10
Average MTR in EU
9.96 Baseline
8
7.05 6
7.32
4
US2centsRecommended per minute
Adapted from COMMISSION STAFF WORKING DOCUMENT accompanying the RECOMMENDATION
0
3.33
Converted to US cents using May 9, 2009 exchange rate
2009 2010 2011 2012
Regulatory Schemes for MTRs in Latin America & the Caribbean (LAC)
Ex – ante
Only regulated when operators cannot reach agreement
Country
Asymetric / symmetric rates
Chile
Symmetric
Colombia
Symmetric
ECTEL
Symmetric
Peru
Asymetric
Argentina
Symmetric
Brazil
Asymmetric
El Salvador
Asymmetric
Venezuela
Symmetric
Trends in LAC • MTRs have not fallen by much over last few years in LAC • LAC has the second highest regional average MTR in the world
US cents per minute 15
LAC
10 5 0 2004
2005
15
2006
2007
2008
2009
10 5 0 Europe LAC
SSA MENA
AP
MTRs in LAC US cents per minute 35 30 25
PPP US cents LAC PPP LAC US cents
35 30 25
20
20
15
15
10
10
5
5
0
0 PerĂşChile Brasil Belize Bolivia Mexico Guyana UruguayECTEL Ecuador Panama JamaicaArgentina Paraguay Honduras Colombia Venezuela Nicaragua Rep.Trin. Dom. & Tob.
Other MTR issues • • • • • • • •
Peak / Off-peak Variation by operator Variation by origination Variation by region Taxes and other adjustments Timetable International termination Pass-thru to retail tariffs
MTRs in Uruguay Uruguayan Pesos per minute
3
6
3.79
ANCEL
MOVISTAR 6
CLARO 3
http://www.ursec.gub.uy/scripts/templates/portada.asp?nota=Contenidos/Consultas %20Publicas/interconexi%F3n/Interconexion&Despliegue=DATOS_big.asp
3
Taxes & other adjustments Chile, MTR, Peak rate (Ch$ / second)
Brazil, price of mobile off-net call (Sao Paulo, Vivo->Oi), US$, 2009
2.5 2.0
$0.60
1.5 1.0
$0.50
Current prices
0.5
Constant prices
0.0 2005
2006
2007
$0.40
2008
Colombia, MTR in current pesos 126 124 122 120 118 116 Dec-07
Taxes
$0.30
Mark-up
$0.20 $0.10 Jun-08
Dec-08
$0.00
MTR
Timetable • Glide paths • Annual reductions • Periodic adjustments
Mobile subscriptions per 100 people, 2008 100 90 80 70 60 50 40 30 20 10 0
LAC Chile CubaHaiti Belize Peru Brazil Bolivia Guyana Mexico Canada Ecuador Panama Jamaica Grenada St.Uruguay Lucia Suriname Honduras Paraguay Bahamas Argentina Dominica Colombia Barbados Nicaragua Venezuela Guatemala St. Vincent Costa Rica El Salvador United States St. Kitts & Trinidad &Antigua Tobag Dominican Republic
MTRs, competition & use 7000
Low MTR High HHI
163
6000 154
5000
165
96 114
311 198 138 137 308 170 189 220 176156 125 216 356 142 195
4000 3000 2000 496
mhcsri H-l ha dni f r e H
High MTR High HHI
1000
211
102
119 158 84
143 124129 112
Minute s of use per month
Low MTR Low HHI
0 $0.00
LAC countrie s
93
High MTR Low HHI $0.15
MTR, 2008, US$
$0.30
USA Canada India China* Hong Kong Singapore Israel Korea Thailand Malaysia Russia France UK Sweden Taiwan Mexico Egypt Hungary Spain Colombia Chile Germany Japan Venezuela Italy Turkey Switzerland S. Africa Peru Brazil Argentina
311 308 CPP
447
367 356
496 492
697
589 RPP
RPP
220 216 CPP 198 195 191 189 163 162 158 156 Minutes of user per month, 2008 154 143 142 138 129 125 119 114 102 96 93 76 0
100
200
300
400
500
600
700
Conclusions • There is a wide divergence in LAC in respect to both MTR regulation and the rates themselves • The average MTR in LAC is relatively high in comparison to other developing country regions • Variety of policies regarding cost model, timetables and symmetry
minges@tmgtelecom.com
ENSURING TELECOMMUNICATIONS SUCCESS AROUND THE WORLD
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