OPTA rejects KPN’s claim in its dispute with Enertel

Competing telecommunications companies may continue to charge KPN a rate for carrying telephone calls on their fixed networks other than the rate which KPN charges them. This is the conclusion that may be drawn from a ruling handed down by the OPTA Commission in a dispute between KPN and Enertel. KPN felt that the charges should be identical in both directions.

The OPTA Commission ruled that the rates which KPN may charge must be based on the costs incurred, but that other telecommunications companies also had to charge ‘reasonable’ rates. Consequently, there may be differences. However, KPN is allowed to pass on the amount which it is required to pay to the other telecommunications companies (also known as interconnection tariffs), to those telephone subscribers who call these competitors. If this results in different charges for KPN’s subscribers, depending on the network through which calls are routed, KPN needs to inform them about this in clear terms, The OPTA Commission has decided. At present, all KPN telephone subscribers contribute to calls to ‘expensive’ telecommunications companies.

Reasonable rates

The dispute between KPN and Enertel mainly concerned the question as to what constitutes ‘reasonable’ tariffs. The Telecommunications Act [Telecommunicatiewet] stipulates that the interconnection tariffs charged by KPN’s competitors must be ‘reasonable’. KPN feels that the cost-oriented tariffs which had been imposed on it, are the only reasonable tariffs. Consequently, its competitors should also charge these tariffs. OPTA has come to a different conclusion in this respect. Since competing network providers have a different cost and network structure, it should not be taken for granted that KPN tariffs are the only reasonable ones.

Implications

OPTA’s decision could put an end to the situation in which all KPN’s subscribers pay for expensive calls. This could make the situation clearer for consumers and give them greater choice. If KPN were to charge individual subscribers interconnection tariffs, the latter could themselves decide whether or not to call companies or Internet service providers that are connected to ‘expensive’ competitors. On the other hand, it would become clear to the customers of these competitors whether it is cheap or expensive to call them. They could opt for a telecommunications company which offers the most cost-effective solution. The visibility of these charges could serve as an incentive for competing telecommunications companies to ensure that their interconnection tariffs are not excessively high.

Internet market

Clarity concerning the interconnection tariffs of KPN’s competitors, and the possible reduction and passing charges on to them may have implications for the Internet market. Internet service providers often also benefit from the interconnection tariffs (high or otherwise) charged by their telecommunications company. Telecommunications companies take a proportion of the tariff that they receive from KPN per minute for transmitting a telephone call to an Internet service provider and pay it to the latter. It is partly because of this that Internet service providers are able to offer their services at affordable tariffs or even free of charge.

Debate

In the weeks ahead OPTA is planning to present a number of dilemmas concerning Internet-related developments to market parties and other stakeholders. The question as to whether or not to pass on interconnection charges to telephone users also plays a role in this respect.