Still defects on the international mobile pricing market

Still defects on the international mobile pricing market

Press release 25.05.2004 00.00 en

Competition on mobile markets varies a lot internationally between call types. In practice, the calls with the lowest prices have often the highest costs.

A study commissioned by the Ministry of Transport and Communications of Finland compares mobile pricing regimes in Finland, Sweden, Germany and Great Britain in terms of competition, monopolies and regulation. The research material consisted of price profiles of the two biggest mobile phone operators in each country. The purpose of the study is to encourage debate about the advantages and disadvantages of different pricing models and to help further develop them.

There are two pricing models used in fixed to mobile communications. In end-to-end pricing, a call has one retail price, whereas in segment pricing, the overall call price from a fixed to a mobile line comprises of two segments; there is one price for the fixed line segment and another for the receiving mobile network segment.

End-to-end pricing is used in countries that have a history with one operator and where several operators have emerged to the market later. Segment pricing, on the other hand, is used in countries like the USA and Finland, where several operators have shared the market. Within the EU, Finland is the only country to apply segment pricing.

The study shows that the pricing regime used in Finland enables competition between the networks and attractive prices. It further reveals that calls from a fixed to a mobile network are more expensive than calls within mobile networks. The lowest minute prices are on competitive markets, i.e. for calls within the same network. With the exception of Finland, prices are the highest on the least competitive market, particularly for calls between mobile networks. In Finland, the pricing between networks is balanced.

A legislative proposal drafted by the Ministry of Transport and Communications, which aims to increase pricing competition in Finland, is currently before Parliament.

Mobile Pricing and Interconnection Regimes. Publications of the Ministry of Transport and Communications 31/2004.
Sold by Edita plc, tel.+358 204 5005. The report is in pdf format on the Ministry's Internet pages

For further information, please contact:
Mr Kari T. Ojala, Senior Adviser, Networks and Competition, tel. +358 9 160 28725, +358 400 812 509