ELENA ZAEVA: MARGINAL TARIFF PRICING IS BEST FOR THE COMMUNICATIONS SECTOR

This approach creates conditions as close to the market as possible

Opening the session of “innovative approaches in efficient tariff regulation”, at the IV International Research-to-Practice Conference “Antimonopoly Policy: Science, Practice, Education” in Skolkovo, Head of FAS Department for Regional Tariff Regulation, Yulia Yudina, emphasized the importance of interaction and experience exchange between tariff regulators form various countries: “Today we can discuss development of the economy, first of all, natural monopolies, various approaches, methods and principles of tariff regulation that are improving and transformed under the impact of the modern trends”.

Elena Zaeva, Head of FAS Department for Control over Communications and Information Technologies, discussed the prospects of tariff regulation in the communications sector.

She informed that the competition authority devised the Procedure for estimating tariff in accord with marginal pricing, which is now submitted to the Ministry of Communications and the Ministry of Economic Development for approval.

In her opinion, marginal pricing is applicable already after a tariff reached the level of economically justified costs in view of the standard profit, when the state needs to stimulate companies for development and efficient operations.

“We consider marginal pricing the best for the telecommunications sector since it maintains the balance between consumers and producers under the current conditions and for rater long-term prospects”, said Elena Zaeva. “One must remember that consumer demand on the communications markets is changing especially intensively in terms of quality and quantity”.

She explained that with such approach to tariff-setting the state must create particular incentives, including:

-Long-term registration of marginal tariffs and / or maximum proceeds;

-Introducing fines and поощрений, changing the producer’s income depending on the efficiency of its work;

-Different methods of evaluating operational efficiency of operators by the regulator.

“In this situation companies avoid a temptation to shift the costs of the competitive sector to the nonj-0compeititve one and a temptation of excessive and unreasonable costs”, pointed out Head of FAS Department for Control over Communications and Information Technologies. “Marginal pricing creates conditions more resembling market conduct and enables companies to calculate their prospects for several years ahead”.

Deputy Head of FAS Department for Control over Communications and Information Technologies, Olga KIlimova, also took part in the session.