In the communications market, service providers determine the prices and tariffs of their services by following the International Telecommunication Union (ITU) Regulatory Toolkit recommendations, including those contained in the ITU, as well as the internationally recognized pricing methodologies endorsed by the World Bank and the World Trade Organization (WTO).
Communications service providers must establish pricing policies that ensure a sustainable level of profitability for their core operations and align the pricing of their products and services with the actual costs incurred, based on cost accounting principles. Prices and tariffs should be designed to maintain long-term efficiency and viability.
Where a service provider is designated as having significant market power, such as a legitimate monopoly or dominant position in a specific market segment, the provider is obligated to submit their base prices and tariffs for regulatory oversight and approval by the relevant regulatory authority.
In accordance with ITU recommendations, three key types of economic efficiency must be considered when setting prices and tariffs:
1. Allocative Efficiency – This relates to the optimal distribution of resources where prices reflect the marginal cost of providing the service, ensuring that consumers pay a price commensurate with the resources consumed.
2. Productive Efficiency – This ensures that resources are used in the most cost-effective manner, encouraging providers to minimize costs and improve service delivery, thereby fostering competitive market conditions.
3. Dynamic Efficiency – This focuses on incentivizing innovation and investment by both dominant and new entrants, promoting the adoption of new technologies, cost reductions, and diversification of services over time.
Price and tariff regulation in communications must balance preventing adverse market distortions with ensuring efficient service provision, supporting sustainable sector growth, and securing adequate returns on investment to foster real economic development. Additionally, prices should remain affordable for end-users and wholesale customers, while aligning with social policy objectives such as Universal Service Obligations (USO) to ensure equitable access to telecommunications services.
1. Policy Guidelines on Prices, Tariffs, and Competition in communications Services of Mongolia
2. Methodology for Setting Telecommunications Service Tariffs
3. Designation of Service providers with Significant Market Power (SMP) and Legal Monopoly Status
4. ITU – MPT Service Price and Tariff Trends
5. Postal Service Prices and Tariffs
6. Regulatory Decisions and Resolutions on Tariffs and Pricing
7. Special Number Prices and Tariffs
8. Prices and Tariffs for Digital Signature Certificate Issuance Services