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EU cuts roaming charges

Finally punts plan to slash prices

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The EU has announced details of its plan to slash the cost of using a mobile phone abroad by up to 70 per cent.

The wholesale cost will be capped based on the cost of the termination rate for calls, which varies from country to country. The EU would annually review an average of this value to set the cap. Then, the mark-up at retail will be limited to 30 per cent. The caps will apply to calls both made and received while abroad.

Information Society and Media Commissioner Viviane Reding, whose department drew up the proposals, said today: "For years, mobile roaming charges have remained at unjustifiably high levels, in spite of repeated warnings to the industry. This is why Europe needs to act now."

The commission had originally hoped to scrap roaming charges altogether, but ditched the plans when they were criticised by industry and regulators as unworkable.

Reding said: "I am convinced that reducing roaming charges will not only be beneficial for citizens travelling within the EU, but will also enhance the competitiveness of Europe's industry. Eighty per cent of roaming customers are businesses, and in particular small and medium sized companies suffer from this substantial cost factor when doing business within the internal market."

The GSM Association, which represent networks, said EU intervention was unneccessary. CEO Rob Conway said: "Its new proposals still amount to a straitjacket that will stifle innovation, dampen competition and ultimately harm consumers. The commission's plans would represent a far-reaching and unprecedented intervention in a market, which is clearly delivering for its customers." The industry argues the wholesale cap level will penalise operators who incur greater costs because of the geography of their patch.

Networks will also be forced to give punters better information, with full disclosure about charges on subscribing and regular updates. Text messaging will not be covered by the measures. See the commission's press release here.

The earliest the regulations could be applied is the summer of next year, following approval from both the EU Parliament and the council of national ministers. Heavy lobbying from operators between now and then is sure to seek to stall the process.

The commission hopes its measures will slash the total revenue European operators bring in from roaming charges from €8.5bn to €3.5bn. ®

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