Roaming Market In Austria - Background

1. How to achieve better regulation of prices at wholesale level which contributes to the creation of a level playing field for mobile operators across Europe?EPP-ED Hearing on the regulation on Roaming, March 8th, 2007

2. Roaming Market In Austria - Background • Mobile telephony in Austria is a success story (high handset-penetration, low rates) • As typical tourist country, Austria has a net inflow of roaming traffic: visitor customers generate about 30 % more calls in Austria than Austrian customers abroad • Roaming revenue share in Austria is higher than in other countries • International roaming is a key element for the success of the mobile market in Austria and therefore is important for Austrian mobile operators

3. The European Roaming Markets Differ Significantly– Example Austria • Tourism is a fundamental part of the Austrian economy • To satisfy tourists full network coverage (over 98%) is conditional • Network coverage is the key element for roaming revenues • Network development in Austria is expensive especially in rural areas (valleys, ski slopes etc) which are important for tourism • In general the development costs in Austria are higher then in other European countries (e.g. the Netherlands or Sweden)

4. How To Construct A Site In Austria „a picture says more than 1000 words!“

5. Proposed Wholesale Regulation Does Not Reflect The Different Cost Situation And The Specific Roaming Costs • Current Regulatory Proposal: € 0.30 per minute (glide path 5 % p.a.) • To focus on average MTRs is the wrong starting point as shown below • Specific Roaming Costs are not reflected • Different cost-situation of MNOs in EU is not reflected • Regulation has to take into consideration that all MNOs can cover their costs • Margins have to be possible 50%

6. T-Mobile Proposal To Average Wholesale Caps: Art. 3 • 1. The total average wholesale charge that the operator of a visited network may levy from the operator of the roaming customer’s home network for the provision of a regulated roaming call, including inter alia origination, transit and termination, shall not exceed € 0.36 per minute. • 2. The average wholesale charge shall be calculated as the total wholesale roaming revenues for all regulated roaming calls originated in the visited network within a 12 months period (including call set-up charges) divided by the total minutes of all regulated roaming calls originated in the visited network within the same 12 months period. Argumentation: • A reduction to €C 36 (average) presents a massive reduction of the price level • No regulation at cost level justified, additional margin shall be possible • Price level allows competition below price caps • No glidepath, otherwise paralysing of competition • „Average“ grants flexibility

7. The Regulation Must Allow Competition Below The Wholesale Cap And Needs A „Sunset“ • The actual discussion shall lead to a balanced compromise between customer requests and the interests of the industry • T-Mobile considers the planned regulation must allow competition below the wholesale cap • Otherwise: Extensive market interventions and its likely negative effects (less invests, market exits, e.a.) can never be taken back. Therefore the voluntary decreases of IOTs according to the Code of Conduct of mobile industry, dated June 2006 shall be a binding benchmark for all MNOs • Beside that, the regulation shall not be established “for the sake of itself” – it shall be guaranteed that after the actual “hotspot”- regulation, the market is again left to market forces • Retail regulation goes to fare and is not required  Market forces have already and will lead to lower prices automatically

8. Thank you for your attention

9. Voluntary decreases of wholesale rates (IOT) Code of Conduct of mobile industry, dated June 2006 The voluntary decreases lead to a price reduction of about 50 %