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EUROPEAN MOBILE TERMINATION RATES DISTORT WHOLESALE MARKET VALUE

London, 20 May 2005 - The high value of mobile termination rates in Europe have contributed to an increase of as much as 12% in value between 2003 and 2004 according to a new report. Regional changes in traffic termination are dominated by the values found in Western Europe which has experienced an overall increase of approximately 12% over 2003. The findings are included in an analytical report, International Wholesale Termination: Voice Values in Fixed and Mobile Markets, produced by BroadGroup (www.broad-group.com) Given that Western Europe, as a destination, accounts for an estimated 30% of all terminating traffic, the report suggests that the mobile premium has a disproportionate impact on the value of the international wholesale voice market. Mobile premiums have in fact increased universally, on a per minute basis, between the end of 2003 and end of 2004. The regions in which mobile termination premiums are highest are those that have broadly achieved high levels of liberalisation and deregulation, except for the USA and Canada which have unique mobile market characteristics. The report suggests that there is a correlation in these regions between the regulatory and competitive impact on fixed network termination rates and the mobile premium. Making adjustments for the proportion of traffic terminating upon mobile networks, the value of the global market increased by US$ 474m or 4%. Globally, the mobile premium increased from US$ 4.2b at the end of 2003 to US$ 4.8b at the end of 2004, an increase of US$ 647m or 15%. This increase is a reflection of two dynamics: an increasing proportion of traffic terminating at higher rates on to mobile networks and, a general increase in the mobile premium compared to fixed and, in some cases, an absolute increase in mobile termination rates. The analysis also reveals that the underlying equivalent fixed market has experienced growth if the mobile distortion is removed, due to volumes. image1 image1

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