The European Commission asked Italian telecommunications regulator AGCOM on Thursday to reduce its proposed cap on mobile termination rates for H3G Italy.

The European Union's executive body said AGCOM notified it in early July of measures that would cap the mobile termination rates of the 3G-operator H3G Italy, a unit of Hutchison Whampoa Ltd. based in Hong Kong.

Though the Commission agreed with AGCOM's approach to determine the cap, but it was concerned the maximum price of 0.1625 euro, which will be introduced from Jan. 1, 2008, was among the highest in Europe.

In EU member states, H3G's rates currently vary between 0.08 euro and 0.1625 euro, and they are foreseen to be further reduced in 2008.

Mobile termination is a wholesale service bought by telephone operators allowing users to call a mobile customer on another network.

AGCOM should consider applying more rigorously its proposed model to further reduce H3G's mobile termination rates from Jan. 1,2008, the Commission said.

"For consumers to benefit it is imperative that mobile termination rates are cost oriented and operators have incentives to become more efficient," said EU Telecoms Commissioner Viviane Reding.

AGCOM reviewed the market for voice call termination on individual mobile networks at the end of 2005 and imposed a price control obligation on the other three operators, namely TIM, Vodafone and WIND, but not on H3G.

The Commission also asked AGCOM to finalize the second round of its market analysis, which is due mid 2008, so cost-oriented mobile termination rates for all four Italian mobile network operators can be introduced as soon as possible.