Global Economics

Mobile Roaming Rates to Be Slashed By EU


On Wednesday (12 July) the European Commission announced its awaited proposals to cut the cost of using mobile phones when abroad.

"Consumers have waited too long to see tangible elements of the single market in this area," said commission president Jose Manuel Barroso.

Mr Barroso added that mobile operators had done "too little, too late" to reduce the "excessive" costs for consumers, with some companies charging five times the cost of the actual call.

"There was no alternative but to intervene in the interest of consumers," Mr Barroso told a press conference in Brussels.

The commission proposal is aimed to cut the cost of using a mobile phone abroad by up to 70 percent while giving industry six-months before the new rules enter into force.

"I gave my first official warning one year ago...and they [mobile operators] failed to reduce prices," said EU media commissioner Vivane Reding

"The market had its chance. It did not deliver," she added.

The final version of the proposal was the result of difficult negotiations within the commission itself.

During the past days media reports revealed how industry commissioner Gunter Verheugen, trade commissioner Peter Mandelson and commisioner Jacques Barrot responsible for transport opposed Ms Reding's original plans.

But on Wednesday Mr Barroso told journalists that "all sides of the debate have compromised."

A majority of EU commissioners was needed to pass the plan, according to the EU treaty rules.

Mobile industry against the proposals

Despite Brussels' softening its original proposals, the mobile industry is still arguing against the move on grounds that many European mobile operators have already made public commitments to lower rates.

"The industry is delivering cuts in roaming prices today, well before any regulatory intervention would come into force," said Rob Conway, CEO of the GSM Association.

"Although the European Commission has dropped its unworkable 'home pricing principle', its new proposals still amount to a straitjacket that will stifle innovation, dampen competition and ultimately harm consumers," he said.

The home pricing principle says prices for cross-border calls should be the same as the customer's home prices.

"The commission's plans would represent a far-reaching and unprecedented intervention in a market, which is clearly delivering for its customers," Mr Conway added.

The Proposals

In the proposals the commission is suggesting a cap on so-called wholesale charges - the fees which phone networks pay one another for processing roaming calls.

Ms Reding's plan also suggests that the prices paid by consumers will be regulated and will be limited to the wholesale charge, with a profit margin of not more than 30 percent.

Member states and the European Parliament must still approve the proposals before they begin to bite.


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