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Operators give mixed response to proposed mobile termination rate slash

By BNamericas Tuesday, November 27, 2018

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Chilean operators have given mixed responses to a proposed slash in mobile termination rates with some worried the measure is premature given the telecoms' current cost model.

Watchdog Subtel has proposed cutting mobile interconnection rates by 84% for the period 2019-2023.

The rate would fall to an average of 1.4 pesos (US$0.068) per minute from the current 8.76 pesos as well as 1.11 pesos for reduced rate and 0.744 pesos for nighttime rate.

Proposals from companies varied between 6.07 pesos per minute and 0 pesos, proposed by WOM.

Claro (América Móvil), WOM and MVNO VTR have largely welcomed the proposal, which is largely in line with their plans.

One of the sticking points appears to be Subtel's argument that given that the majority of traffic now runs on 4G networks, networks are more efficient and consequently cost per user is much lower.

However, while this applies to data, a large amount of users still use 3G networks that are more costly.

In a statement, Entel's head of regulatory and public affairs, Manuel Araya, said, "while the dominant technology today is 4G, in Chile there are still 10mn users on 3G networks, the Subtel proposal doesn't take that into account."

Araya added that the proposed mobile termination rate was lower even than the rate for fixed line termination, which is unheard of anywhere in the world.

On the other hand, Cristián Salgado, regulatory and legal affairs director with Claro said the proposal was "technically sound" and "goes in line with international trends and will generate greater competition in the sector which will benefit millions of mobile users."

VTR's legal and corporate affairs VP Miguel Oyonarte, expressed a similar view.

"We believe the authority's decision goes in the right direction because it recognizes the technical and economic reality of the mobile market, which has changed radically over the last five years which justifies a significant reduction in access charges to boost competition and bring down prices for the end user."

WOM was of a similar opinion adding that it had proposed an even lower rate.

"Mobile termination rates are part of operators' cost structure, which are added to the price paid by the end user. We are convinced that 4G networks are the technically speaking the appropriate technology for the business model of any efficient company," WOM's director of regulatory and public affairs Felipe Simonsohn said.

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