The cost of making calls to mobiles should fall in September 2004 and 2005 following a proposal by the Commission for Communications Regulation (ComReg) to impose a price cap on mobile firms for the first time.
The cap is one of a series of measures that ComReg plans to introduce to address a lack of competition in the market for termination rates. In a paper published yesterday, it also proposed forcing mobile operators to open up their accounts for scrutiny to ensure they are not overcharging Irish consumers.
Mobile termination rates are the charges mobile firms levy on other telecoms operators, both fixed and mobile, to connect their customers' calls to mobiles.
These charges are passed onto consumers by operators in their own retail tariffs. Fixed operators blame them for the high cost of calling mobiles.
In a ruling yesterday ComReg found the market for voice call termination services in the Republic was not competitive. It said all four mobile phone operators in the Republic - Vodafone, O2, Meteor and 3 - would each be designated as having significant market power in this market.
By so doing, ComReg triggers a mechanism that enables it to impose remedies on the operators. And in a separate paper published yesterday the regulator outlined a plan to introduce a price cap to force mobile firms to reduce fees.
Until now the mobile phone industry in the Republic has not been subject to a price cap and it is likely that it will lobby against the proposed price regulation.
ComReg's ruling on significant market power and its proposed remedies must be notified to the European Commission before they can be introduced. The Commission could potentially rule against ComReg's proposals.
No mobile phone operator would comment on the proposed cap on termination rates yesterday, but Vodafone and O2 said they had already voluntarily agreed to reduce rates.
A Vodafone spokeswoman said termination rates in Ireland were among the lowest in Europe and the firm had already agreed to reduce such rates by 20 per cent over a three-year period.
In its paper ComReg said it would take account of these voluntary tariff reductions by Vodafone and O2 and not enforce the price cap until September 2005.
At this point ComReg plans to assess O2 and Vodafone's cost structures to determine by how much they should reduce their mobile termination rates.
Industry sources said it was at this stage that ComReg would face a tough battle with the two big mobile firms. Similar rulings by ComReg on Eircom's cost structures have resulted in legal challenges in the past.
Meteor and 3 - the new entrant to the Irish mobile market - are unlikely to face the same pressure to reduce mobile termination rates as they entered the market much later than O2 and Vodafone. Under ComReg's current proposals they are not allowed to raise their mobile termination rates.
