Poland: EC criticised the use of comparative pricing methodology

[ec] The national telecoms regulator of Poland, Urząd Komunikacji Elektronicznej (UKE), intends
to impose remedies for regulating mobile termination services (the wholesale prices which
mobile operators charge to other mobile or fixed operators for terminating calls on their
respective networks) on three of the largest mobile operators in Poland: Polkomtel SA, Polska
Telefonia Cyfrowa Sp. z o.o. and Polska Telefonia Komorkowa Sp. z o.o. The proposed
remedies include obligations to provide access on a transparent and non-discriminatory basis
as well as to apply termination rates based on actual costs incurred.
What has the Commission said in its letter sent today?

The Commission stressed that mobile termination rates should be set according to the costs
required by an efficient operator providing the relevant service. Therefore, it found the
methodology chosen by UKE – charges based on cost incurred, and as verified through
comparison with other countries – does not promote efficiency and as such should only be
considered as a temporary measure. In addition, the Commission encouraged UKE to
carefully select the objective criteria and countries for comparison. When reviewing its
market analysis, the letter also advises UKE to follow the costing approach on regulatory
treatment of fixed and mobile termination rates recently recommended by the Commission.
The Commission also noted that UKE has repeatedly been setting mobile termination rates
without following EU or national consultation procedures. Against this background, UKE was
also reminded to notify the Commission and the national regulatory authorities of other
Member States of draft measures relating to price control obligations and prices (e.g. price
levels, amendments to the methodologies used to calculate costs or prices). In the absence of
such consultation, the Commission indicated that it would consider using its powers relating
to infringement procedures against Member States.

Under EU law, the national telecoms regulator of Poland is required to take utmost account of
the Commission's comments. Therefore, UKE should clearly specify and indicate in its final
measure the criteria for selecting countries against which it will compare costs and it should

also start aligning its costing methodology with the Commission's recent Recommendation
regarding termination rates.

Telecoms: Commission comments on regulatory proposal from the Polish national telecoms regulator regarding mobile termination rates