Mobile termination rate benchmarking

The problem

The mobile termination rate (MTR) charged by our client and its competitors was to be set in a new regulatory process. Our client wanted to ensure that it achieved a successful outcome in this process, gaining a pro-competitive advantage from asymmetric termination rates.

The client wanted to demonstrate that past decisions on MTRs had given it limited benefits, and supportive regulatory measures were needed.

The solution

Asymmetric termination rates in favour of smaller operators had been in place for a number of years, but our benchmarking analysis showed that the magnitude of these asymmetric rates was small in comparison to other countries.

• this is shown in the chart opposite, where many other operators gained a higher asymmetry and at larger market shares

We provided a unique analysis of the accumulated effects of asymmetry in MTRs to demonstrate that later entrants benefited from larger market shares where there was stronger asymmetric MTR support.

We supported our client with additional analysis and argumentation on a range of related issues, including:

• costs, profits and competition
• regulatory pricing and policy objectives

Figure 1: Our client's asymmetry compared with benchmarks in other countries [Source: Analysys Mason, 2014]

The result

We produced a benchmarking report that was submitted to the regulatory authority by our client, supporting its views on asymmetric MTRs. We also advised our client on the pros and cons of different arguments around symmetric and asymmetric MTRs.

The client submitted its response to the regulator’s consultation; the regulator subsequently proposed termination rate reductions for the mobile industry that met our client’s short- and long-term business objectives.