Asymmetric interconnection rates not 'silver bullet' for market dominance

By
Monday, July 7, 2014

The implementation of asymmetric mobile termination rates (MTR) is not a "silver bullet" to tackle dominance issues in telecoms markets, Daniel Leza, legal and regulatory VP for global ICT consultancy TMG, told BNamericas.

However, asymmetric rates can form part of a host of regulatory measures that together may help address some of regulators' underlying concerns related to market dominance.

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The use of asymmetric mobile termination rates by regulators have an impact on the market, and provide non dominant operators with an additional revenue source. But they must be seen as part of broader regulatory measures which are being adopted, he added.

Several countries in Latin America have implemented asymmetric MTR as a means of reducing market dominance.

Colombia's telecoms watchdog CRC implemented asymmetric rates against Claro at the beginning of last year, in a move which aimed to increase competition and improve service tariffs for users.

However, the initiative will not be successful unless other telcos take the opportunity to invest in infrastructure and improve their commercial offers, CRC director Pablo Márquez said.

Claro recently said that the asymmetric MTRs were "hurting" the company, and that the operator needed to be "aggressive" in the Colombian market during this year.

Meanwhile, secondary telecoms legislation, which was recently passed in the Mexican senate, includes the removal of MTR charges for operators to end calls on América Móvil's network.

Mexico and Colombia have a "particular" market structure, and as such the implementation of asymmetric mobile termination rates is a regulatory solution tailored to Latin America, Leza said.

Usually differential MTR charges are used as a tool to facilitate the entry of new players, rather than to fight market dominance, according to the analyst.

This is because new market entrants typically have higher termination costs and smaller scale than established players, and regulators make adjustments to compensate for that, he added.