26 October 09: European regulators aim for bill-and-keep
MLex market intelligence has recently reported that:'European telecoms regulators are currently setting out how a migration from a current regime of termination rates to a US-style bill-and-keep regime might take place. While previously the prospect of a bill-and-keep mechanism for termination was merely mooted as one of many alternatives to the current interconnection regime, the European Regulators Group representing national telecoms authorities has now moved a step closer to implemeting such a regime in practice. "The conclusion is that bill-and-keep could be more promising than calling-party-network-pays as a regulatory regime for termination," said ERG chairman Matthias Kurth at a debriefing in Brussels on the conclusions of the latest meeting of national regulators in Switzerland.'
'Currently, the regulation of telephony - both fixed and mobile - works on the basis of a calling-party-network-pays regime. This means that operators pay other providers a per-minute fee for calls that leave their own network, while collecting money to connect incoming calls. There is currently a regulatory process to drive these regulated per-minute charges down, particularly for mobile networks, with a long-term view to bring these costs close to zero. In an IP-based environment, where calls are routed over data networks, the costs of interconnection become negligible.'
'Kurth said that the move to bill-and-keep would lead to a higher level of economic welfare overall, but that there were many factors to consider. He acknowledged that a switch in termination regime would not be good for all players in the sector, and that the competitive dynamics could be altered as a result of such as switch. Relying mainly on evidence from the United States, where a bill and keep regime is in place, Kurth said that per-minute revenues were likely to drop, but would be offset by a higher volume of calls.'
The ERG put its proposals out for consultation on 14 October with a view to adoption in the second quarter of 2010. The consultation paper can be found here. A hearing on the proposals is scheduled for 4 November in Brussels.