Mobile working Toolkit

EC caps mobile roaming rates

Tags:
Roaming,
Operators,
European Commission

David Meyer ZDNet.co.uk

Published: 12 Jul 2006 13:25 BST

The European Commission has decided to cap the wholesale price that mobile operators charge each other when customers use their phones outside of their home country.

The plan, which will be introduced in stages over the next six months, should see the cost of using a phone overseas fall by up to 70 percent.

Now that it is finalised, the proposal — which has sparked bitter protests from the mobile industry — will go before the European Parliament for approval.

Arguing that "competition alone has not brought the developments needed", EC President Jose Manuel Barroso said that the Commission had "no alternative but to intervene to protect the interests of consumers".

"The single market is first and foremost for consumers, not only individual consumers but also small to medium-sized companies," Barroso said on Wednesday, adding that those consumers would now get "a fairer deal".

"[It's] not so much about intervening in the market but rather about creating a market," Barroso continued. "Prices are already regulated at a national level — we are not proposing to come into national markets [but are] addressing the issue that only the Commission can solve because it's a cross-border area not addressed by the national regulators."

Mobile operators will be given a six-month grace period to pass the reductions in wholesale prices on to consumers, before the EC imposes retail caps as well. "We will give the operators a final chance, a chance to show they are serious about self-regulation," Barroso said.

"The retail regulation will automatically come into force without any further ado after six months. If the operators by then have brought down their prices then the effect on the operators of this retail regulation will be nothing," added Viviane Reding, the Information Society and Media Commissioner.

Reding said there was currently no linkage between prices and costs in international roaming, adding that roaming prices were as much as four times the cost of a domestic mobile call. "At present we have total non-transparency and I'm sure to some extent that's deliberate," she said.

She assured mobile operators that "there is ample room for businesses to fix their prices and to present their models, and even to present price packages", while staying under the proposed retail cap – wholesale plus 30 percent.

Reding emphasised that the regulation "will not require transposition into national law", but would be applicable "immediately after adoption by [the European] Council and Parliament".

Adding that "competition was functioning very well" in national markets, she claimed that this competition would ensure that operators would not make up lost roaming revenue in their domestic markets.

According to Barroso, 147 million mobile users in Europe will be affected by the moves, and Reding added that citizens can "go to national courts" to attack the non-application of the Commission's proposals.