OPTA encourages competition in the mobile phone market. Designation of KPN and Libertel as holders of significant market power.
The OPTA Commission has given added impetus to competition between mobile operators by means of two complementary measures. OPTA has designated KPN and Libertel as parties with significant power in the mobile phone market. In addition, OPTA has made it mandatory for KPN to pass on all of the interconnection tariffs which mobile phone operators charge it. This is to say that the charges for calling a mobile phone may differ from one provider to the next. In this way consumers will obtain greater clarity as to whether a call to another mobile operator’s subscriber is cheap or expensive. Through these measures the Netherlands is acting in accordance with European Union policy.
Significant market power
KPN and Libertel have been accorded their designation under the terms of the Telecommunications Act. In principle, a market player possesses significant market power if its market share exceeds 25%. A study conducted by OPTA has revealed that both parties have a market share which is greater than 25%, and that there are no special circumstances, on the basis of which OPTA should refrain from such designation.
According to the Commission, the designation of KPN and Libertel as parties with significant market power will first of all boost competition in relation to the development of new mobile network services. Following this designation, KPN and Libertel will be required to provide special access to, amongst others, those market parties that do not have their own mobile network, subject to reasonable conditions. This will facilitate the entry of new market parties and will offer greater potential for innovation. The possibility of offering carrier-select services on mobile phone networks is an example of such special access.
This measure will also promote more efficient interconnection (direct or otherwise) between mobile phone operators, which will yield cost savings. In the situation currently prevailing in the market, all mobile calls are routed through KPN’s fixed network, which OPTA believes is not efficient, certainly because KPN is still having to contend with a capacity shortfall in its fixed network and because mobile operators have to pay for this.
As a result of this designation, those market parties that have not been designated may charge differentiated interconnection tariffs. Mobile phone operators are consequently able to compete with each other in respect of these interconnection tariffs. Together with the designation of KPN and Libertel as parties enjoying significant market power, it could act as an incentive for mobile phone operators to lower their interconnection tariffs. Because such a reduction would have immediate implications for consumer charges for calls to mobile phones, OPTA anticipates that the relevant market parties will also start competing with each other in relation to their interconnection tariffs.
Tariff differentiation makes it mandatory for KPN to ensure that any change which the mobile operators make to their interconnection tariffs, is charged on in full to its end users. In this way it is possible for a mobile operator to determine for itself what it costs to call its mobile phone subscribers from a fixed phone. OPTA has also imposed a duty on KPN to ensure that it is always clear to a landline caller what it costs to call a specific mobile phone number.
OPTA is assuming that the designation which it has now decided on, along with tariff differentiation will boost competition in the mobile phone market, which will have an impact on consumer charges, increase available alternatives and provide greater clarity as to which provider is expensive and which is cheap.