MADRID Dec 27 Spain's telecoms watchdog said it
would scrap a fixed line rental price for former monopoly
Telefonica's clients, freeing up the incumbent to make
more revenue from its declining fixed line business.
The regulator said competition had increased in the Spanish
market, in part due to the proliferation of bundled services,
meaning the fixed monthly price of 13.97 euros ($18.47) set in
2008 was no longer necessary.
Before its privatisation in the 1990s, state-owned
Telefonica was the only phone operator in Spain. The relaxation
of price fixing is until 2016, the regulator said.
Rivals like France Telecom's Orange and Vodafone
are concerned that Telefonica could use income from line
rentals to lower prices for other services including broadband,
according to watchdog Comision del Mercado de las
"This deregulation allows Telefonica to act with almost
total freedom in the fixed line market, which it already had
significant control in. There is no doubt this could negatively
affect the already limited competition in the market," a
spokesman for Vodafone said.
Other operators charge around 15 euros a month line rental
but as part of packages that include broadband the overall price
for consumers tends to be lower than Telefonica's, according to
Telefonica had no comment on whether it would change prices.
Orange and Jazztel did not have an immediate comment on
Telefonica's share of the fixed line residential market has
fallen to 54 percent from 75 percent in 2007, while in broadband
its market share stands at 43 percent, down from 49 percent in
Its total fixed line revenue in Spain fell 9.6 percent
year-on-year to 7.2 billion euros in the first nine months of
Telefonica's overall revenue dipped 13 percent year-on-year
in the same period in Spain, where one in four of the workforce
is jobless. The company lost 284,000 mobile connections in
Telefonica must only raise the rental fee in line with
inflation and inform the regulator of any new prices or
promotions in advance, the CMT said. The regulator first
proposed line rental flexibility for Telefonica in July.
The debt-laden group has taken a number of steps to fight
back in an increasingly competitive environment, including the
introduction of a new bundled mobile, fixed line, television and
Telefonica said this month it had beaten estimates for
uptake, with 1 million customers signed up for the new "Fusion"