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TARIFF REBALANCING & PRICE CAPS

As part of the first round of retail fixed market reviews in the electronic communications industry, the Gibraltar Regulatory Authority (GRA) has published a Decision Notice on Tariff Rebalancing and Price Cap controls on Gibtelecom.

The communications regulatory framework, which is contained in the Communications Act and implements a series of EU Directives, requires the GRA to analyse the state of competition within the electronic communications markets in Gibraltar. When markets are not effectively competitive, the GRA must consider appropriate regulatory obligations on any operator which has Significant Market Power (SMP).

The GRA has designated Gibtelecom as having SMP and, for the first time in Gibraltar, has imposed a price cap control on Gibtelecom in the following markets:

1. Retail access to the public telephone network at a fixed location
2. Retail national publicly available telephony services from a fixed location
3. Retail international publicly available telephony services from a fixed location.

The Authority will apply a retail price control in the form of Index of Retail Prices, IRP-3 to a Specific Set of services offered by Gibtelecom in the retail markets above. The retail price control shall apply on 1st May 2009 and end 30th April 2012.

In addition, two sub-caps shall apply to the monthly line rental charges and these sub-caps will constrain price increases each applicable year for residential line rental and business line rental.

Together with these price caps, Gibtelecom will be allowed to rebalance the retail tariffs in respect of line rentals and introduce per second billing for local telephony calls. This will provide a net long-term benefit to almost all residential and business customers.