Germany’s network regulator, the Federal Network Agency (FNA), has proposed a 50% cut in mobile termination rates (MTRs), in a move to bring the fees in order with European Commission targets.

With the starting of this month the rate chop down to US$0.043 for Royal KPN’s local unit E-Plus and drop to US$0.044 for Spain’s Telefonica O2 Germany, from a previous rate of US$0.093 for both firms. The market’s two largest operators, UK-based Vodafone and incumbent Deutsche Telekom, will see their call termination charges fall from US$0.086 per minute to US$0.0436 for the former and S$0.044 latter.

For the first time, the announced rate cuts are provisional and subject to negotiations between market participants in Germany, as well as the commission and regulators in other European Union member states. Final rates will be announced by the end of the first quarter of 2011, but will be effective retroactively from 1 December 2010 until 30 November 2012. According to the regulator, it calculated the new MTRs on basis of the costs the providers claimed to have for operating their networks, but also took into consideration the interests in their investments and costs for spectrum.

According to reports, the country’s network operators have slammed the rate cuts. As per DT spokesman Andreas Middel it is a disastrous decision, especially in the light of upcoming investment in fourth generation networks.

Although agreeing in principle that MTRs have to decrease, E-Plus spokesman Guido Heitmann claimed that the cut was too significant as it will make planning more difficult for all market participants, while Rene Schuster, CEO of O2 Germany, claimed that the FNA’s decision is not helpful for further investment and hence harms customer’s interests. Although the regulator’s calculation can be questioned, no one has the power to veto against the new MTRs, the FNA noted.