BRDO calls for the NCCIR to abolish price regulation in the international communications market

20-04-2021

Better Regulation Delivery Office (BRDO) proposes to abolish price regulation in the international communications market amounting to 98 million euros per year. The relevant analysis was published on the BRDO website.

When a foreign subscriber calls a Ukrainian subscriber, a foreign operator should pay for the traffic termination service to a Ukrainian operator. The termination fee amount per international traffic unit (one chargeable minute) is called an international mobile termination rate (IMTR).

The process of determining market termination rates is bilateral: Ukrainian operators and their foreign partners agree on mutually beneficial rates, according to which traffic will be terminated within the networks of Ukrainian operators and their foreign partners.

If one of the two parties increases the termination rate, the other party may also increase it. However, Ukrainian operators are forced to terminate traffic at low rates, as they are limited by the decision of the National Commission for State Regulation of Communications and Informatization (NCCIR).

In 2017, the NCCIR ordered Ukrainian operators to accept international traffic at a rate of 0.10 euros per minute. At the same time, foreign operators can charge 0.15 – 0.20 euros or more for the same service. Ukrainian operators do not have the right to refuse traffic termination, even if it is unprofitable for them.

As traffic termination at a low price is guaranteed for intermediary operators, they can offer much cheaper traffic delivery to Ukraine for foreign operators, than if foreign operators agreed directly with mobile operators. Revenues of intermediary operators from the international traffic transit increased by 2.7 times in 2017 alone. In total, in 2020, the market for international traffic transit at a regulated rate amounted to 2.5 million euros, and the market for international traffic termination amounted to 98 million euros.

“We believe that it is necessary to abolish IMTR price regulation in Ukraine. The current situation does not allow for the freedom of pricing for Ukrainian operators, limits their negotiating positions, and artificially increases the intermediary traffic transiter market,” Ihor Samokhodskyi, ICT Sector Head at BRDO, said.

Such price regulation does not meet market requirements. BRDO calls for the NCCIR to abolish IMTR price regulation, namely the requirement of para. 2 of item 1 of the NCCIR’s decision No.456 dated 30/08/2016.

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