Mobile industry vows to fight roaming cuts
Published: 13 Jul 2006 12:15 BST
The mobile industry has hit back at the European Commission's move to slash roaming charges, as the details of the finalised proposals start to sink in.
After Information Society and Media Commissioner Viviane Reding and EC President José Manuel Barroso announced their intention on Wednesday to push through roaming charge cuts of up to 70 percent, operators claimed the move was unnecessary. A major industry body has already vowed to lobby the European Parliament into a change of heart.
"We'll be seeking to talk to parliamentarians about this and explain our views to them," David Pringle of the GSM Association told ZDNet UK on Wednesday. "We recognise that the Commission has dropped some of the more unworkable elements of the first proposal, but we still see this as a straitjacket for the industry… we're not happy with the retail price cap at all."
Pringle added that there was "potentially work" the GSMA could do in terms of "influencing" opinion within the Council of Ministers — the third and final stage (after the European Parliament) before the proposals become law.
Those comments led Stefano Nicoletti, an analyst with Ovum, to warn that intense lobbying could make the European Parliament's decision "very much political rather than purely technical".
A representative of operator O2, which is owned by Spain's Telefonica, said the cuts could lead to "less investment in future technologies", and would be "hard on smaller operators" and their suppliers.
"There's no other industry in the single market that is regulated to such an extent," the O2 spokesperson complained, adding: "It needs to be recognised that there shouldn't be a one-size-fits-all approach as people have different travelling patterns. If you have a single approach then one of those camps will not benefit".
Under the proposals, a capped wholesale rate for roaming connections will be levied across the EU. A retail cap will follow automatically in six months, theoretically giving operators the time to restructure their prices accordingly.
"We'll see what happens in six months," said O2's spokesperson. "We'll review the options that are available to us. [Our] tariffs are pretty much at the level of wholesale rates anyway, so we feel that we've done our bit."
Orange expressed similar views in a statement on Wednesday, saying: "The action that Orange and other operators have taken recently clearly indicates that competitive forces are at play and are continuing to drive roaming prices down. Orange therefore believes that it is through competition, not regulation, that customers' needs are best met."
Several UK mobile operators, including Orange, cut their roaming charges earlier this year after Commissioner Reding first announced her plans.
T-Mobile UK's managing director, Jim Hyde, said: "For a long time, we've said roaming rates are too high… We have not needed regulation to encourage us to cut roaming costs."
Hyde went on to claim that some fault lay with people who don't use their phones abroad, saying: "True mobility means affordable mobility and at present too many mobile customers just don't use their phones abroad. That acts against their interests — and against ours. Our new 55p roaming rate is as simple as it gets."
Informa analyst Mark Newman agreed that there was "a huge number of people today who are afraid to turn their phone on when they go on holiday because of the high roaming charges for both making and receiving calls".
"Operators are now going to have to find a way of stimulating the use of roaming services to compensate for the loss of inbound roaming traffic," Newman said on Wednesday.
Newman continued: "The wholesale rate caps that Brussels will impose are roughly half the rates that are charged currently. Wholesale prices in Europe have been falling anyway by around 20 percent per year in each of the last two years so the decision from the European Commission represents a substantial acceleration of this fall in prices.
"In terms of retail price levels, we believe that operators will pass these cost savings onto end users rather than risk further intervention from Brussels. However, this does not necessarily mean that operators will make prices more transparent, particularly with regards to the hidden 'extras' that get added onto the per-minute prices."
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