05.06.2007

FICORA's report: Ineffective competition in calls to universal access numbers

The prices for phone calls to universal access numbers are exceptionally high in Finland, if the calls are made by mobile phones. These prices have remained almost unchanged since 1990s, while the prices for other mobile calls have, due to competition, substantially decreased. A typical price for a mobile phone call to a universal access number is so far nearly 30 cents per minute, whereas calls from a mobile phone to a normal fixed network number cost 7-8 cents per minute. The price for a phone call dialled from a fixed network subscriber connection to a universal access number is considerably lower and approximates to the price for an ordinary local call (about 8 cents per call + 2 cents per minute).

Problems with the pricing model and wholesale pricing

During the spring FICORA has investigated the pricing for calls to universal access numbers by collecting market information and inquiring into the views of different organisations using universal access numbers.

A major problem in the pricing of calls to universal access numbers is the currently applied pricing model where the call charge is determined by the telecommunications operator who has sold the number to the undertaking. When the price is determined by the operator used by the undertaking, there are minor incentives for price competition. Calls to universal access numbers are almost always business calls that are necessary for the consumer irrespective of the price. If the prices were set by the caller's operator, the prices for calls to universal access numbers would be equally based on competition as the pricing for other mobile calls.

The current practice is that the telecommunications operator who has provided the universal access number pays the originating fixed or mobile network operator a so-called access compensation on the wholesale level. The access prices charged by mobile network operators involve no competition and FICORA's opinion is that they are excessive.

Measures are expected from operators

FICORA regards that a functional market can best be enhanced by affecting the wholesale pricing and the prevailing practices enabling excessive pricing. On FICORA's initiative, operators have already set up negotiations for reducing wholesale prices. FICORA has no mandate for direct determination of retail prices for calls to universal access numbers, but it requires that the reduction of wholesale prices also appears from the end-user prices of phone calls to universal access numbers.

FICORA has sent telecommunications operators a letter requesting for information, by 15 June 2007, on introduction of new wholesale prices and when changes in wholesale prices are expected to be seen in the retail prices paid by callers.

The letter [PDF, 125 KB] sent to operators is available on FICORA's website in Finnish.

Further information:
Petri Makkonen, Head of Research, tel. +358 9 6966 381, +358 50 430 0391
Tuomas Haanperä, Communications Market Specialist, tel. +358 9 6966 433