Watchdog fines three cellphone operators

Movistar, Vodafone and Orange punished for abusing SMS system

The Spanish anti-trust authorities have fined Movistar, Vodafone and Orange a combined 119 million euros for using their dominant market position to overcharge virtual cellphone operators for using their networks for SMS text and MMS multimedia messages.

The fine was the second highest after the 120 million euros imposed on a group of Spanish and foreign insurance companies in 2009.

The National Competition Commission (CNC) specifically fined Telefónica’s Movistar 44.5 million euros, Vodafone 43.5 million and France Telecom’s Orange 29.9 million.

The sanctions were imposed after a probe was launched into the three operators in January 2011.

Barriers to entry

The CNC ruled that the three operators held a collective monopoly over the receipt and sending of short messages. While the wholesale cost charged to other operators for sending and receiving cellphone voice calls has fallen 70 percent over the past 10 years, the costs for SMS and MMS messages have barely dropped 5 percent.

The watchdog said the high wholesale costs of SMS and MMS has prevented virtual operators from lowering the prices they charge their clients.

It said the price levels also constitute a de facto barrier of entry and limited rivals’ ability to expand.

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