Sunday 16 June 2019

Blow for consumers as Vodafone wins court case over mobile fees

Mr Justice John Cooke: ruled against Comreg's price caps
Mr Justice John Cooke: ruled against Comreg's price caps

Ray Managh and  Aodhan O'Faolain

NEW price controls that could have reduced the cost of making mobile calls have been shot down in the High Court.

The regulator Comreg has been told it cannot impose a new price cap on how much Vodafone charges other mobile companies to carry its calls.

ComReg and the EU have been trying to reduce the fees that mobile companies charge each other for carrying calls as these feed into the final prices paid by consumers.

High charges also make it harder for new mobile companies to get a foothold in the market.

Vodafone had appealed two ComReg decisions imposing new maximum wholesale charges to other mobile companies for a service called 'Mobile Voice Call Termination'.

Mr Justice John D Cooke said ComReg had directed Vodafone to adopt a particular cost-recovery method and charge a maximum of 2.6c per minute from January 1 this year and just over 1c per minute from July 1 onwards.

In a reserved judgment, he said the issues concerned the nature of ComReg's entitlement to take account of relevant European Commission (EC) directives on pricing and cost-recovery methodology.

ComReg had come up with its pricing instruction to Vodafone by benchmarking what it charged against seven EU member states.

BENCHMARKING

Vodafone's case was that ComReg's methodology was incompatible with EC rules and that the regulator had acted unlawfully in fixing prices without reference to actual costs in the Irish market.

Judge Cooke said the benchmarking approach adopted by ComReg in the price-control decision was beyond the powers designated to it under EC regulations and could not be justified as having been authorised by an EC recommendation.

ComReg's use of a benchmark based upon only seven EU countries had produced a result so flawed by its random nature and uncertain reliability that it could not constitute a sufficiently robust basis for the application of EC regulations.

The judge said the court would allow the appeal in part and set aside ComReg's direction to Vodafone to ensure that its mobile termination rates were set at 2.6c and l.04c per minute.

While the price-controls decision applied to five other mobile operators, only Vodafone had brought a challenge to ComReg's decision, but the outcome will also have implications for the other operators.

The judge said the charges related to one particular service described as 'Mobile Voice Call Termination' (MVCT), the service whereby mobile companies receive inbound voice calls on their networks. The case related to a price-control decision of November 2012 for that service.

Vodafone had claimed that because of the very high volume of voice-call traffic, small variations in charges had a very significant impact on revenue.

It told the court its termination rate had fallen from an average of 9.59c in the second half of 2007 to an average of 3.68c in the second half of 2012.

The judge adjourned the making of final court orders and considering a stay on his judgment until September 24.

Vodafone welcomed the judgment. It said mobile termination rates were between companies and didn't have any direct impact on consumer pricing, but the new price caps would have inhibited future investment in advanced broadband networks.

Comreg said it was studying the judgment but didn't have any comment regarding its impact on consumers.

Irish Independent

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