Examination of Witnesses (Questions 220-239)
Mr Frank Krüger
27 FEBRUARY 2007
Q220 Lord Lee of Trafford: But never
above 30?
Mr Krüger: Yes, the average never above
30. You could have a differentiation between peak and off-peak.
Q221 Lord Lee of Trafford: It could
be 20/40 between two operators.
Mr Krüger: Between two operators at different
times but, at the very end, after the stipulated period, it must
be 30¢.
Q222 Chairman: Are there any other variations,
for example between volumes or between different times of the
year?
Mr Krüger: Yes, maybe different times of
the year. I was told by operators and by Member States that it
is not that important to differentiate between several different
seasons, but it might be possible of course, yes.
Q223 Chairman: I understand.
Mr Krüger: We think that it should not
be the case that the Commission is collecting data year by year
and calculating a new MTR. We think that they should calculate
it at the very beginning, on the basis of data that is already
provided. We should have this maximum average figure already fixed
at the very beginning, and then it should decrease by a certain
rate. We propose five per cent.
Q224 Chairman: Over two years? After
12 months and 24 months?
Mr Krüger: Yes, 12 months and 24 months.
We proposed that the regulation should only last three years,
because we think a sunset clause is a good, proportionate proposal.
A lot of Member States at the very beginning were against retail
regulation at all. We therefore think that it might be proportionate
to reduce it to a certain amount of time, because we think that
the prices will come down very quickly and that it will not be
possible to increase them a lot afterwards. Everyone is aware
that they have to pay for roaming and have to pay a certain figure.
If they use it more often, then they are aware of what they have
to pay and I do not think it will be possible for operators to
increase it a lot. That is the main problem. We have seen that
there is a lack of transparency in the market.
Q225 Chairman: The sunset is only on
the retail and not on the wholesale?
Mr Krüger: The sunset is on the whole regulation,
yes.
Q226 Lord Geddes: Do you envisage
that the regulation could be renewed, if there were the will?
Mr Krüger: Yes, it could be renewed if
appropriate. It could also be extended to data regulation.
Q227 Lord Geddes: To . . . ?
Mr Krüger: Data regulation—SMS and
MMS.
Q228 Baroness Eccles of Moulton:
Only after two years?
Mr Krüger: After 18 months the Commission
should provide us with a report on the developments within the
market, whether there was an increase of prices in national markets,
and the development in the data market for SMS and MMS and then,
on the basis of this, they can make a new proposal. I think that
there is a broad agreement within the Commission, within the Parliament—I
have just followed the ITRE debate—not to start with regulation
on the data market. There are real concerns about regulation at
the retail level at all. So we think that it might be the best
approach to start with voice regulation and then have a report
after 18 months. If appropriate, the Commission can propose an
extension of regulation in time and in content. So that is extended
to new markets. The reason why we do not do it from the very beginning
is because we do not have any impact assessment on the data market.
It is a different market; it is different to voice calls. If we
asked the Commission to carry out a report and an impact assessment,
it would delay the whole regulation. I think that everybody is
in favour of having a First Reading agreement under our Presidency,
so in the first half of the year.
Q229 Lord Mitchell: But the data
is going to grow very rapidly, is it not, in the next year or
two?
Mr Krüger: Yes.
Q230 Chairman: That is wholesale. Can
you also talk about retail?
Mr Krüger: Retail was a little more difficult,
to be honest. We have had the last Council on 11 December and
half of the Member States were completely against retail regulation
and were in favour of the sunrise clause.
Q231 Lord Mitchell: Are you able
to say which states they were?
Mr Krüger: A lot! Fifteen, including UK.
It was across Europe.
Q232 Lord Mitchell: Was it predictable?
Could you predict who it would be?
Mr Krüger: No, it was not predictable in
that way. I do not have any doubts now that all the Member States
are at least in favour of what we proposed as a Presidency, of
a consumer protection tariff. The reason why we proposed this
is because we considered the figures proposed by the Commission
to be too low. The 30 per cent was too low. No innovation would
be possible under the Commission figures; no competition; no alternative
tariff packages. Therefore, we proposed retail regulation on the
basis of a consumer protection tariff, where you can opt out as
a new customer and you can opt in as an existing customer. We
proposed the level 50/25 without VAT, for making calls and receiving
calls. We think that there must be a lot of freedom for innovative
tariff schemes and for competition. So currently we are in the
middle of the position of the ITRE Committee, which is the leading
one, and of the Commission, which is favouring opt-out only.
Q233 Chairman: Just to be clear on the
retail, is the current thinking not to have a specific retail
average cap? I can understand the consumer protection tariff.
Mr Krüger: Yes, this is the minimum, and
you are right.
Q234 Chairman: A consumer protection
tariff of, say, 50¢ per minute.
Mr Krüger: Yes.
Q235 Chairman: With an opt-out for existing
and an opt-in for new customers, but what about for an immediate
regulation, as the Commission wants, for retail? The current thinking,
I think, is the equivalent of about 42¢ or 43¢ per minute,
based on 130 per cent of the wholesale rate.
Mr Krüger: You mean an average regulation?
Chairman: Yes.
Baroness Eccles of Moulton: The Commissioner
was not for average, though, was she?
Q236 Chairman: No, the Commissioner was
not for average.
Mr Krüger: We are still proposing additional
to the consumer protection tariff, that there might be an average
of—we are currently discussing—40¢, because it
may be that, if not enough people opt in or if too many opt out,
consumers may not be well protected at all. To be clear, currently
half of the Member States are in favour of that and half of the
Member States are against, and more are shifting away from the
average. One reason could be that we are not quite clear what
is the percentage of business minutes and what is the percentage
of private minutes. We had several figures. Vodafone told us 20
per cent business minutes, 80 per cent the rest. Another company
told me that it was 50:50, and the impact assessment says 70 per
cent business and 30 per cent private. The more business minutes
you have, the higher the private customer can be charged at the
end. So there is not a lot of safety with an average, and it may
also be too much red tape. We are still discussing, however, and
we do not have any result on this.
Q237 Chairman: But it is perfectly conceivable
that you might end up in the informal working party meeting of
ministers, and indeed in the Council, without a retail cap. You
may have a consumer protection tariff figure at a much higher
level as a kind of fallback. Do you think it conceivable that
it would be just a wholesale and a protection tariff?
Mr Krüger: What are you actually proposing?
That we have a higher figure for the consumer protection tariff?
Chairman: No, I am asking is it possible
that a majority of the ministers will decide not to proceed at
this stage with a retail cap, other than, as it were, the safety
net of the consumer protection tariff?
Q238 Lord Lee of Trafford: Stick
at the wholesale?
Mr Krüger: No. We think that there is broad
agreement now on having at least a consumer protection tariff
at retail level. That is the reason why I mentioned the Council.
I think that there has been a sort of shift during the last month.
We will see at the informal meeting on 15 March in Hanover, but
I think that most of the Member States in the group are quite
supportive—all Member States are quite supportive—and
we are just discussing—and it may be difficult enough—whether
it must be an opt-in or an opt-out, an additional average, or
not. However, we are already at this level and we are discussing
further whether we should have retail regulation at all. At the
end, it will be a question of opt-in, opt-out, and of the figures,
to be honest.
Q239 Chairman: Do you include what you
call an average retail cap, of say 40¢, as part of the tariff,
or is that a separate issue?
Mr Krüger: Yes, it is a separate issue.
It is an additional issue. You have the consumer protection tariff,
opt-in, opt-out and additionally, as a safety net, to say, "Okay,
there aren't enough people opting in" or "Too many are
opting out, and we don't want to lose them", so they are
protected by the average. However, you never know whether or not
one is protected by the average, and it is a lot of work for the
national regulatory authorities.
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