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Falling telephone charges secured for three years through price capping

OPTA, the regulatory authority for the postal and telecommunications markets, wishes to secure KPN’s telephone charges for three years. This would ensure that both the companies active in the telecommunications market and consumers would know what tariffs to expect during that period. In September OPTA wishes to decide on the proportion by which call charges are to fall.

This is stated in a discussion document on price capping, which OPTA published today. In this document OPTA sets out its position on this price-capping system, also referred to as a price-capping regime. OPTA wishes to fix the charges paid for a package of KPN telephone services for three years with the aid of this system. The introduction of such a price-capping system was announced by OPTA when it made a decision to reduce KPN’s telephone charges at the end of last year.

According to OPTA, the following telephone services would be covered by this price-capping system: subscriptions, charges for local and national calls, landline calls to mobile phones, telephone directory listings, and the tariffs for telephone information services. The average price charged for this package of telephone services would fall each year. With regard to local call charges, OPTA is considering an additional one-off reduction of these tariffs, if it becomes clear that competition fails to develop appropriately in the local telephone market in the years ahead. The matter is currently being investigated.

All stakeholders in the telecommunications market will now be afforded the opportunity to respond to OPTA’s position on price capping first. OPTA will consider these responses when it takes its decision in September. The idea is that the price-capping system will apply retrospectively to 1 July 1999. Consumers will then be faced with reduced telephone bills by no later than 1 January 2000.